I might be 26, but I’m pretty sure I’m not a real adult. I think to achieve adulthood status you might need to know how to cook something other than grilled cheese for dinner. And you probably can’t do your laundry at your parents house. Or watch Pretty Little Liars . . .
My friend Meg is also 26, but I’m fairly confident that she is a real adult. I have evidence to prove it. In the last couple of months she has done these three majorly impressive things:
1. She graduated from med school. So she’s a doctor. A real, medical doctor.
2. She got married. In a beautiful ceremony on the water. No eloping to Vegas here.
3. She bought her first home.
To say I am proud of her is an understatement. You go, girl! Doing any one of these things on their own would be an achievement but Meg is a rock star of the adult world and did all three in like six weeks. Almost two years ago, Meg and her then fiance were just starting to think about getting their own place. So to help her out, I wrote three posts about first-time home buying (you can read them here: Part 1, Part 2, and Part 3).
Flash forward to today – Meg and her now husband are now the proud owners of their very own home and I have decided to swoop in to take all the credit. Just kidding. But I did bribe Meg with free brunch so that I could ask her some questions about her experience buying her first place. She had some super smart advice to share with other twenty-somethings considering purchasing a home of their own.
Q. Did any tips from my blog posts help you during the home-buying process?
A. The answer to this, surprisingly, is yes! Maybe I have this adult thing down after all. There were two key things Meg learned from my blog that were really helpful to her: what earnest money is and that she should get a home inspection. Earnest Money is basically money you pledge to put down on a home to show the seller that you’re interested. Meg said it can be the difference between getting a place or not because the larger your earnest deposit, the more serious they know you are about the purchase. Meg also used my tip of getting a home inspection before they bought. It only cost them $325, but they found out about $1,500 of upgrades that need to be done to the fireplace. The home inspector was a neutral third-party who advised Meg on potential issues with the home that they could use when negotiating the purchase.
Q. What were you looking for in your first home? What were your must-haves? Did you and your husband agree on what you were looking for in a new place?
A. It is important to note early on in this blog that Meg is an incredibly organized individual. So it did not surprise me to hear that Meg and her husband started their home-buying process by making three lists: a “Must Have” list, a “Would Like to Have” list, and a “Couldn’t Care Less” list. Their Must-Haves included: location, 2 bedrooms, off-street parking, a tucked-away space for a litterbox, and a good kitchen (they cook a lot, because they are adults). They agreed that these were the 5 most important things to them and that they wouldn’t seriously consider anywhere that didn’t check all of those items off their list. Their Would-Like-to-Haves were things that they might consider paying extra for or things that they would be excited to have in addition to their Must-Haves. If a potential home had outdoor space, a second bathroom, or a dining room, those things might make them pick that place over another viable option. Then the “Couldn’t Care Less” list was stuff they agreed wouldn’t influence their decision at all, like crown-molding or stainless steel appliances. Getting on the same page before they even started looking at listings made the search process a lot smoother. Even if you’re a single-purchaser, give yourself some solid guidelines for what you want to help you differentiate a potential home from just another listing.
Q. Did you use a realtor?
A. Yes! And you should too! Meg and her husband specifically looked for a realtor who was their age, which they would recommend to any other first-timers. She said it helped to have someone who they could easily relate to, who had a similar work/ living situation, and who was at the same phase in his life. And even though Meg did a lot of research on her own looking for potential places online, she said it was super helpful to have a professional also helping with the search.
Q. How was financing with a small, local FI different from working with a mega-bank?
A. Because of the convenience factor, Meg has had her checking account at a mega-bank that shall remain nameless since college. She’s moved around a lot from undergrad to med school to residency, so it seemed like her best option. But when it came time to finance her first home, she went with a small, local financial institution. The biggest reason for the switch? The personal service. She was able to build a relationship with her mortgage officer that she wouldn’t get at a bigger bank. She had one person working on her mortgage from start to finish, she had his office and cell number, and she knew any time she had a question he was just a phone call away. If she had financed her home at the big bank she had been using, she would have called a mortgage hotline with her questions, would have talked to a different rep every time she called, and probably would have waited on hold a lot. Meg had such a good experience banking small that she switched all of her accounts over from the mega-bank. Yay for local banking!
Q. What was the best advice you got?
A. This advice came from me! And probably everyone else she talked to because it’s super important. Once you get pre-approved for a mortgage, leave your credit alone. Don’t apply for any other loans, credit cards, etc. Your pre-approval is an estimate of what your mortgage rate be and how much you can spend that’s based on your credit when it was created. If you do anything to change your credit, your pre-approval can change too. You don’t want to find your dream place only to find out that you are no longer able to finance it.
Q. Was there anything that surprised you about the home-buying process?
A. Meg definitely knew what she was getting into before she bought a home. She spent over a year researching and prepping before she even started looking. But even for someone as well researched as her, she was surprised at how different the cost of things in Maine were from what generic articles online suggested they might be. This is because the cost of everything, from housing to materials to labor, all varies depending on where you live. You might read online that it will cost about $1,000 to fix that leaky shower head, but your shower has unique parts or faulty plumbing so it ends up costing you $3,000. On the flip side, she was prepared to pay as much as $1,500 for a home inspection that only ended up costing her $325. Be aware that even the best planned budget can get thrown off a little during this process, so give yourself a little leeway if you can.
Q. What advice do you have for other twenty-somethings looking to buy their first home?
A. Do your homework. You can’t be too prepared (believe Meg, because she tried). The first step to this whole process should be doing research. Look into everything, from what you’ll need to do to finance the home to what the housing market is like in your area. There’s a ton of online resources out there, as well as professionals like mortgage officers and realtors who can help you along the way. Doing research beforehand helps you set realistic expectations for what kind of home you can afford, how long the process will take, and what you will need to do.
It took them a year or so of prep and several months of searching, but Meg and her husband just recently purchased a condo in the West End of Portland. It meets all of their Must-Have requirements and it even has a fireplace. #fancy. Looks like all of their hard work has finally paid off. Congrats!