I could use some guidance. I’m a senior graduating soon with a degree in business management. I plan to take a job as a regional manager trainee soon after graduation. The job is all the way across the country, in Michigan.
I’ve already begun my research, and I’m making arrangements to relocate. The good thing is that there seems to be many properties available to buy. I hadn’t originally considered signing a mortgage so soon, but I have decent credit, and the idea of building equity as soon as possible is very appealing.
My question is: what else can I do to build equity, especially if I end up with a pre-owned home instead of one brand new, which is probably a great deal harder to get?
Congratulations on your impending graduation, and on the new job. There are typically few things more satisfying than your college graduation and landing the first job in what will ideally be a long and fruitful career. As for your quest for knowledge about homeownership, there’s no shortage of important factors to consider. Fortunately, millions of Americans before you have overcome the challenges associated with buying their first property. The endeavor is daunting, but not impossible.
The best and simplest recommendation is to learn as much as you can about the buying process. Unlike renting, which is far easier, by comparison, buying a home is often an extended and arduous process. Melanie Penola at LifeHacker published a relevant article highlighting the top ten things you need to know before buying a home. She introduces several compelling points. Key examples include being wary of fixer-upper homes, saving up for the initial down payment, and creating a list of deal-breakers.
Another helpful perspective comes from Forbes writer, Kellie Phillips Erb, who echoes much of what Melanie wrote, but in a separate piece. It’s important to note that Kellie also suggests using a qualified realtor and getting ready to pore over many legal contracts. Once you feel confident in your foundational knowledge (no pun intended!), you can begin to field the more pragmatic question of whether a new or pre-owned home is a better option. Gerard Anthony at LendingTree openly compared buying a new versus pre-owned home. That’s a great place to begin understanding the main pros and cons.
By now, you should realize that buying a home, whether it’s new or pre-owned, essentially demands a meaningful time commitment, in addition to a financial one. You should be prepared to devote several years to the property. That’s also what enables you to build more equity in the home. Justin Pritchard at The Balance has done you the favor of explaining how homeowners typically build equity. Increasing your property value, according to him, is accomplished through home improvement, upkeep, and rising market prices. The first two are well within your control; however, the last is mostly a matter of time and chance.
Remember that buying a brand new home and having it built would most likely prevent you from incurring hidden costs associated with retroactive maintenance and repair. Michigan, for instance, is notorious for its frigid winters and heavy snowfall. That could translate into considerable damage to a home’s rooftop and/or foundation. In other words, you might find an ideal prospective home, but fail to check those things. That might later result in paying for a foundation repair, which can be a costly oversight. You’ll have to dig into the finer details with each and every home you inspect, assuming that buying a pre-owned home is the direction you take.
“Collect things you love, that are authentic to you, and your house becomes your story.” – Erin Flett