Buying Your First Home as a Millennial
Buying a house is often the biggest, most stressful purchase you will ever make, but if done correctly can be an incredibly rewarding experience.
According to a 2013 report by the National Association of Realtors, the "Millennial" or "Gen Y" generation, born from 1980 - 2000, is the second biggest demographic of home buyers behind "Gen X", comprising 28% of all purchases. 79% of Millennials are first time buyers, with a median age of 31 in 2013. In Philadelphia, residents aged 25-29 and 30-34 comprise the two biggest demographics - 16.1% of the total population - according to the 2010 census.
The Home Buying Process
Before you begin your home search process you need to consider your finances. Business Insider published a list of the average salary needed to purchase a home in 25 major American metro areas. Philadelphia ranks right in the middle of the pack at #13 - requiring a salary of just under $37,000 to afford the median price of $213,000. However, CNN Money reported that the 2013 median price in Philadelphia was $175,000 using data from Trulia. Going by this data, it would be 46% cheaper to own a home than to pay the median rent price of $1,600 a month.
The next step is to find a reputable buyer's agent to guide you through the stressful labyrinth of modern day real estate. A buyer's agent will lay down a map of the entire process, recommend properties for you to, schedule all of your in-person showings for properties that you're interested in, answer all of your real estate and local community questions, draw up all necessary paperwork, and handle all negotiations. And you don't even pay out of pocket!
After you have found a reputable buyer's agent, you need to get pre-approved for a mortgage. You'll need to finance your purchase, and consultation with a mortgage lender is a crucial step. Pre-approval also shows that you are serious about purchasing a home - some sellers will not even begin negotiations with buyers who are not pre-approved.
Once you're ready to begin the home search process in earnest, you need to determine where you want to look for a home. Some of the most popular Philadelphia neighborhoods for young professionals have traditionally been Manayunk/Roxborough, Graduate Hospital, Northern Liberties, and Fairmount/Art Museum. But in recent years Fishtown, Kensington, and Port Richmond have also become very popular destinations for younger buyers while still remaining affordable. Your Realtor will be able to best determine your price range after your mortgage pre-approval and search for homes in these areas.
Now comes the biggest task of all - looking at homes and finding the one you want to live in. For 42% of buyers, searching online is the first step in this process. You'll also want to check out any recommendations from your Realtor. This will all take some time: the typical home buyer searched for 12 weeks and viewed 10 homes before making their final decision.
When you've found your dream home, it's time to make an offer. This is one of the biggest tasks for a Realtor, who will determine what they think to be the appropriate market value for the home and possibly make deductions to the price for repairs that will be required.
Next, you'll need to secure homeowners insurance. Insurance protects owners in the event of catastrophe, and if something goes wrong, insurance can be the bargain of a lifetime.
You'll also need to hire a reputable home inspector to give their professional opinion on the state of the home. A Realtor can give you a general overview of the house, but a home inspector's expertise is absolutely required to verify the integrity of the foundation and the utilities as well as make sure everything is up to code.
The final stage of the home buying process is closing the sale, also known as "settlement" or "escrow". The lender will confirm the home’s value and legal status as a residence and your continued credit-worthiness. This involves a survey, appraisal, title search, and a final check of your credit status. Your Realtor will handle the bulk of this process and provide you with updates, so all you need to do is remain in good financial standing.
Finishing Touches
Once you sign the papers and pick up the keys to your front door, you're officially a homeowner! Congratulations! Even after you close on your house, you agent can still help you fill out your first tax return as a home owner, find contractors to help with any necessary repairs, remodeling, or home maintenance or remodeling, monitor your home’s current market value, and of course help your friends and family find homes!If you are looking for Realtors in Philadelphia to assist with your home purchase or sale, contact the Century 21 Alliance Philadelphia office at 215-483-3131, visit our website, or check out our Google+ Page. Happy house hunting!
