The Millennial’s Guide to Buying a Home (NYC Edition)

Homeowners!

How To Buy a Home (for Dummies)*

STEP 1: Save.

  1. Your down payment (ranging from 3% — 20% of the purchase amount. More on that in step 2)

STEP 2: Get pre-approved for a loan (or as I like to call it, “why is everyone telling me to ‘shop around’ for a lender????”)

Example: Say you’re purchasing a home for $400,000.

STEP 3: Find a solid realtor to work with and start looking at homes.

Zillow.com, AKA Satan’s homepage.

STEP 4: Make an offer. Or two. Or ten.

No.

  • Bidding wars. This is when a listing agent deliberately prices a house on Zillow for way less than it should be to incite a bidding war among interested buyers.
  • Competitive market. With insanely low rates and a shortage of existing homes or new builds, competition is more fierce than ever.
  • Cash offers. As they say, cash is King (or Queen), and many sellers prefer cash offers to mortgages.
  • Waived contingencies. A contingency is a stipulation that a buyer makes in their offer in order to move forward with the purchase. It’s basically saying that the offer comes with strings attached and is contingent on a mortgage, appraisal and inspection (these are the basics.) But because the buying landscape is so competitive these days, a lot of buyers will waive their contingencies in order to make for a more appealing offer and faster closing process for sellers. I do NOT recommend doing this: you may be more likely to get your offer accepted, but you could run into significant issues down the road and be on the hook for hundreds of thousands of dollars.
  • Overbidding. Unlike in the case of an underpriced home, in today’s market a home doesn’t even need to be underpriced for a ridiculous bidding situation. In the past couple of years, many people will begin their offer at the listing price or higher, if the home or location is desirable enough.

STEP 5: Post-offer acceptance.

  1. Home Inspection. A home inspection is typically a mandatory action after an offer is accepted. I say typically because until the last couple of years, it was absolutely critical that you get an inspection done, lest your home have some serious hidden issues and you’re stuck paying for it after the fact. Now, because of the ridiculously competitive market and short supply of homes, buyers are opting to waive the inspection. I definitely do not recommend doing this if you can avoid it.

STEP 6: Contract signing, process and negotiations.

Actual photo of me when I learned how much my closing costs were.

WHAT CLOSING COSTS ENTAIL:

This is what a standard closing costs document looks like. Source: Consumer Financial Protection Bureau.
  • DO NOT MAKE ANY LARGE PURCHASES
  • DO NOT OPEN NEW LINES OF CREDIT
  • DO NOT CHANGE JOBS

STEP 7: Closing.

  1. Unexpired form of identification. Your driver’s license, state ID or passport all work. Bring two IDs just in case.
  2. Bank checks/Cashier’s Checks. This is to pay your remaining closing costs.

Congratulations! You are officially a homeowner.

Happy Hunting!

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Tania Rahman

Tania Rahman

thriving in chaos is a double-edged sword.