Congratulations graduate! Welcome to the real world. At this point, you’ve likely grown tired of being asked “what’s next?” by your parents and their friends. While that question can be overwhelming, it’s something that you should consider.
What’s next for your career? What’s next in your personal life? Where are you going to live? Perhaps you are already in the process of figuring out your career and personal life, but what about your living situation? In this article, we’re going to talk about one option that can answer this question—buying your first home.
Weigh the pros and cons of buying vs. renting
Before making this major life decision, you’ll want to weigh the pros and cons of buying versus renting a home to make sure buying is the best option for you.
One of the biggest advantages of buying a house is that you have the opportunity to build equity. However, there are some other factors to consider before you make a final decision. For instance, typically you will need more money upfront when buying as opposed to renting. On the other hand, a mortgage payment is set, while rent prices can increase.
It’s also important to consider that buying a home may give you a sense of permanence, but with that permanence comes more responsibility. A homeowner is responsible for maintenance and repairs, while renters can call their landlord to handle these issues. Moreover, when you buy a home, you can customize it to truly make it your own, but renters don’t have that freedom since they don’t own the space.
As you can see, there is a lot to consider, so it’s a good idea to do your research on both options to make sure you know what you’re signing up for. Both homeownership and renting have their advantages and disadvantages. Your decision will largely depend upon the time, money, and energy investments you’re ready and willing to make.
Are you interested in more flexibility and less maintenance, or does permanence, freedom to personalize, and the opportunity to build equity mean more to you? Only you can decide what’s best for you!
How to buy your first home
Buying a home right out of college may be uncommon for your peers, but that doesn’t mean it’s impossible. Granted, the process may trigger a little anxiety, but we’re here to help you develop a game plan and enjoy the journey.
As you navigate this new, adult task, there are a few things you should do, including; researching first-timer advantages, reviewing your savings, and checking your credit score. In addition, you will also want to analyze your monthly income and expenses.
Take into consideration the cost of things like student loans, your car payment, groceries, utilities, and discretionary funds. Unfortunately, all of these expenses come with the territory of living on your own, so don’t ignore them.
Once you have taken some time to carefully examine the above, you can apply for a mortgage pre-approval. This is an important step because it will help you determine what kind and amount of mortgage you are eligible for. Without this information, even the preliminary stages of your house hunting will be useless. You need to know what you can afford before you begin looking at homes that are out of your budget.
Don’t be disappointed if the amount you are approved for is not as high as you hoped. You still have options. You can make a plan to seek out a starter home that you’ll stay in for a few years, or you can pump the brakes on house hunting until your income increases. There’s nothing wrong with rooming with a friend to share the cost of rent as you save up for a home or living with your parents for a little longer.
If you are satisfied with the mortgage preapproval amount, take that information and begin making a realistic list of things you want in a home, based on your newly established budget. Think about how many bedrooms you want, whether you want a two-story home, how important a master bedroom with an attached bathroom is, and other important details.
You will also want to seek out information about the closing process and down payment as soon as possible. If the mortgage payment itself is doable, but the down payment is out of reach, you may be able to get help.
Plans for turning your house into your dream home
Once you have decided whether to buy a home and then set your budget, it’s time to start looking. It’s important to remember the potential of the houses in your budget. Don’t be deterred if they are not what you expected.
Any house can become a home with a little patience, elbow grease, and an open mind. For instance, with fixer-uppers, you just need to know what to look for when seeking out its hidden potential.
If you decide to purchase a home that isn’t exactly what you want but shows promise, it’s normal to feel a little overwhelmed by all of the work needed to beautify your new space. However, a seamless way to cover the cost of home improvements and appliances for a new homeowner is by using a home improvement loan. A home improvement loan is a type of personal loan that can really come in handy for those who have not built up enough equity to take advantage of a home equity loan.
Additionally, for a recent graduate, taking out a personal loan is a great way to diversify your credit profile. Before you consider this option, be sure to determine an estimate of how much money you will need to finance your home decor dreams. Be realistic.
Remember, this is your first house, and it does not have to be extravagant. Focus on making it a home rather than filling it with the newest and most expensive things. Most importantly, remember that this is a process and that not everything has to be completed at once.
You can use savings to cover the cost of home improvements, as well. Take the time to establish how much of your own money you would like to dedicate to home improvements, how much you can secure in grants, and how much you need through a personal home improvement loan.
Conclusion
As a recent graduate, you have a lot on your plate. Take a deep breath and relax. Let the information you’ve just consumed sit for a little bit. Once you wrap your head around everything, make a plan that works for you, and you will be well on your way to a successful first-time home buying experience. How many of your peers can say that?!
