Congratulations! If you are reading this blog, then you are likely embarking on the grand adventure of buying your first home. It’s a wild journey, filled with unexpected twists and turns, laughs, tears, laminate counter tops and parquet flooring, that ends with a big check and a place to call your own.
If you are seeking some advice, consolation or just a boost to get you through the last steps of the process, I’d be happy to impart some of my (limited) wisdom on you.
This is my friendly reminder that I am not a realtor, a home buying professional, a mortgage lender or anything of the sort. In fact, I’m basically a child with no experience except for my own, so I have no professional advice to actually give you – just some tips based on what I learned from buying my first home.
These are the confessions of a first-time home buyer.
There are going to be a lot of things you don’t understand
As a first-time home buyer, you’ve gotta accept the fact that you probably know a little, tiny, baby amount about buying a home when you start this process. Terms like PMI, escrow, APR, pre-approval and appraisals may scare you, confuse you and make you want to drink. But that’s OKAY.
In fact, you might get all the way through the process, have the keys in your hand, and STILL not fully understand what just happened. That’s okay, too. Remember, 82% of adulting is just pretending like you know what’s going on. The good thing is, you’ll work with professionals who do this day in and day out, so they’ll be able to give you all the deets in terms you can understand and hold your hand along the way… maybe literally, if you need that type of support.
If you want to get a head start on the knowledge intake, I’ve included some helpful articles that’ll give you the low-down on all those confusing terms and a timeline of the home-buying process so you know what to expect during each step. YOU CAN DO THIS.
Everyone is going to want to give you advice
Like ya gurl Abbey, everyone is going to have an opinion on the “right way” to buy a house. Whether that’s your friend who recently bought a home or your parents who bought their last home 20 years ago, there are going to be lots of opinions being thrown your way. The most important advice is going to come from the people who know your financial situation the best: you, your realtor and your lender.
It’s totally fine to listen to advice from friends and family, but know that the decision is ultimately yours to make!
It’s okay not to put 20% down
To be honest, I haven’t talked to one person in their mid twenties who was able to put a full 20% down on their home. Unfortunately, that’s the case for most of us because of debt and inflation. (BTW, the average price of a home in the 1980s was $47,200 compared to 2019, which was $266,800. WOOF.)
Fortunately, it’s not the end of the world. If you don’t have a 20% down payment sitting in your bank account ready to go, you’ll pay something called PMI. Basically PMI is private mortgage insurance and it is tacked onto your mortgage payment each month until your 20% down payment is reached. It basically ensures that you’re good for the money.
That said, you should put as much money down as financially responsible for your situation. In fact, if you can wait to save up a little more before buying a home, I highly recommend doing it. The more you pay up front, the smaller the loan you’ll have to take out and those interest rates are NO JOKE as you pay on that loan for the next 30 years.
Reign yourself in with a realistic budget
This is probably the biggest “duh” confession, but it’s SO true. It’s easy to watch HGTV and see couples fight over budgets and one of them ends up winning and they spend way more than anticipated on a home.
That’s not a great plan, clearly, but it could happen easier than you think. Here’s my advice: don’t even LOOK at houses outside of your budget. All it will do is make you sad and you don’t want to be unnecessarily sad when you’re looking for a home.
When you buy a home, a good rule of thumb is that you shouldn’t spend more than 28% of your gross monthly income on your house payment. Use this rule to decide on a realistic budget. Remember, you don’t want to be house poor! You still have to furnish said house, pay for any unexpected repairs and factor in the closing costs and any additional fees that come with buying a home.
Freaking out a little? Never fear. Here’s a great mortgage calculator to determine how much you can spend on a home.
Interest rates are no joke
Let me tell ya, interest rates will do a number on your finances over the years… let’s break this down for a second.
When you buy a house for $250,000 and you put 20% down, you’ll be taking out a $200,000 loan for 30 years. However, at the end of 30 years, you will have paid MUCH MORE than $200,000 thanks to that pesky interest rate. Say your interest rate is 4%. Over the years, you will end up paying an extra $143,739 in interest alone. That’s terrifying. So, over 30 years, your $250,000 house will have cost you $393,739.
So, don’t forget about how important interest rates are to the overall price of your home and use this information to decide how long you want your mortgage term to be – 30 years? 15 years? These decisions will affect how much you pay each month on your home.
If this scares you, it kinda should! Mainly because even if you do pay close to $400,000 on a $250,000 house, it’s still only a $250,000 house. If you have the option to choose a 15 year mortgage or can pay more toward the principal of your loan each month, you totally should! Any extra money can make a big difference and shave both years and thousands of dollars off your loan.
Here is some information on how to calculate how much you would pay for your home with interest applied.
Definitely use a realtor
As a home buyer, you don’t have to pay a realtor anything! Your realtor makes money off of the commission of the house you buy, which they split with the seller’s agent.
Realtors are great if you are new to a city or aren’t sure what you are looking for in a home. They know the ins and outs of the neighborhoods and can even get you into showings for houses you know will be scooped up right away.
Plus, they are magical wizards when it comes to negotiating on your behalf and are working around the clock to ensure you have a fighting chance of getting your offer accepted by the sellers.
Navigating the home buying process for the first time can be tricky, but your realtor will be your biggest advocate from start to finish.
Don’t judge a house by the photos on Zillow
This is for better or worse, y’all. Just because the photos on a listing look crappy doesn’t mean that the home won’t charm the pants off of you when you see it in person. And, on the other hand, some photographers have the magic skill to make rooms look larger and hide any imperfections in the listing photos.
It can be really disheartening when you show up at the house and realize the place is a shoe box, has a horrible tile job in the kitchen and backs up so close to a McDonald’s that you could basically yell your order from the backyard and the drive-thru attendant would hear you. (True story).
My best advice? Just see it in person. Photos are deceptive and only your own two eyes can be the final judge!
It’s nothing like what you see on HGTV
I feel like HGTV can paint a romantic picture of what the home buying process really looks like. There is usually a cute host (or hosts) who takes you through the process and makes it look sOoOoO easy.
Plus, the people on these shows have WAY too large of budgets for what they do. The scenario is typically something like, “Hi, my name is David and I study endangered lizards. And this is my wife, Polly who stays at home to raise our 16 parakeets. Our budget is $650,000.”
Since that likely won’t be the case for you, it’s important not to compare your experience to anyone else’s – even your friends or coworkers. When people talk about the process and how much they spent, you likely don’t get the full story.
Everyone’s home-buying journey is different, so don’t get discouraged when the process isn’t what you expected. In the end, you’ll have a great home to call your own and that’s what really matters!
You are going to have to compromise
You can’t always get what you want. You sang that sentence, didn’t you? In all honesty, when you’re looking at houses, it’s veryyyyy slim that you’re going to find everything you want in one home.
Even if you’re looking at new constructions, you’ll probably find something that you’d like to change that doesn’t necessarily fit your personal style.
The easiest way to not get hooked on this is to make a list of your must-haves based on your budget.
A good place to start is determining the location and how many bedrooms and bathrooms you need. After that, think about whether you’d like a fixer-upper or something that’s more move-in ready. Then, you can focus on smaller details like a garage, the size of the yard, the style of home, etc. You might not get everything you want, but you should be able to get what you NEED.
Expect things to go wrong
Ugh, I hate even writing this because I’m such a silver-linings type of person. After having our offer accepted on what we thought was going to be our dream home, we had to back out of our contract 2 weeks later after we found major issues during the home inspection. It was extremely difficult to start the process all over again and lose out on a home that we loved.
That said, just plan for at least SOMETHING to go wrong in the process. It likely will, even if it’s just something small. The good thing is, in the end, you’ll find the home that you were actually supposed to get and it’ll be unicorns and rainbows every day after that.
Your first house isn’t going to be your forever house. And that’s okay.
We live in a time where people are being buried by student debt, are still living at home with their parents and are constantly being judged for not living up to the world’s standards. Many of us who are buying homes in our 20s aren’t able to put 20% down, are having to buy much smaller starter homes or delaying the home-buying process altogether. It’s a weird situation when many of our parents or grandparents have been in the same home their entire lives.
Now is the time to accept the fact that your first home isn’t going to be perfect. It’s not going to look like the perfect “Pinterest home” and it might be shittier than some apartments you’ve rented, but if you open up your perspective and see the bigger investment that owning a home is, then it’ll be worth it. And if you’re afraid your friends or family will judge you for the home you buy? Screw ’em. They should be proud of you, no matter what.
You’re gonna be so happy
It’s a crazy process, but it’s so worth it! Having a place to call your own and being able to put your mark on it is such a good feeling. Want to paint a purple smiley face on your bathroom wall? Want to scream Celine Dion at the top of your lungs at midnight? You da boss, boss!
Are you getting ready to go through the home buying process? Are you currently in the midst of finding your first home? Let me know how it’s going in the comments! Good luck and godspeed!