Title: Navigating Homebuying: A 24-Year-Old Engineer's Tale in Maryland
Welcome to our new series, "From First Home to Forever Home," where we chat with individuals about their real-life journeys to securing their first property. In this installment, we talk with Noah, a 24-year-old engineer from Maryland, about the ups and downs of purchasing his initial residence.
Purchasing your first home is an exciting milestone, but it's not without its challenges. Prices are fluctuating in various areas, while they're skyrocketing in others. Aspiring homeowners may encounter hurdles like limited inventory, rising prices, and fierce competition from cash buyers. Dive into Noah's personal experience navigating the home-buying process for the first time and discover insights on how you might do the same.
Getting to know our homebuyer
Here's what you need to know about Noah:
- Age: 24
- Location: Pasadena, MD
- Relationship status: Single
- Job and income: Associate Fire Protection Engineer / £60,000 ($87,000)
Let's explore the costs of buying Noah's first home
Here's an overview of Noah's first home's expenses:
- Home price: £356,000 ($429,500)
- Down payment: £160,000 ($200,000)
- Closing costs: £12,200 ($16,200)
- Reserve funds: None
- Moving expenses: £32 ($40), U-Haul rental
- Monthly mortgage payments: £1,674 ($2,079)
- Annual property taxes, insurance, and HOA fees: £4,966 ($6,292)
Let's talk about the details of securing Noah's first home in this market
How did you determine your budget and the size of the house you could afford?
Thanks to financial aid from my parents in the form of a substantial down payment of £160,000 ($200,000), I could budget for properties in the £350,000 - £400,000 ($420,000 - $450,000) price range or homes that required a maximum loan of £200,000 ($250,000). This range was manageable with my salary, taking into account additional expenses like insurance, utilities, and taxes. I utilized online tools to estimate comfortable monthly payment ranges based on loan size.
What should first-time homebuyers know about mortgages?
Remember, the first mortgage offer you receive is not necessarily the best one. Explore various lenders, even if you're uncertain about your credit score. It's essential to compare at least two to three lenders to fully evaluate your options.
What proportion of your income goes towards mortgage payments?
Approximately half of my monthly take-home income is dedicated to mortgage payments (49%).
Reflecting on your experience, what would you have done differently?
The main regret I have is waiving the home inspection before closing, as it led to issues down the line. I opted to forego the inspection in order to close the deal quickly. While this allowed me to acquire the property, it resulted in issues, such as a severed exterior internet line and a faulty dryer, which needed repair. In hindsight, some of these problems might have been spotted during the inspection, saving me time and money in addressing them.
What unforeseen expenses arose?
The primary unexpected cost was the AC system repair. Several months after moving in, I realized that the air conditioning system was not efficiently cooling the house. An inspection revealed that the evaporator coil had been compromised, causing all the refrigerant to leak out. The repair cost included both the inspection and expenses for a new evaporator coil, refrigerant, and labor, amounting to about £2,000 ($2,500).
What tips do you have for first-time buyers?
My top pieces of advice for first-time homebuyers include utilizing your real estate agent to their full potential, not becoming emotionally attached to one house, and keeping essential documents:
- Take the time to find a real estate agent who genuinely supports your interests. My agent was instrumental in identifying potential properties and helping me determine what I truly desired during the process.
- Don't establish an emotional attachment to any single house too quickly. It's simple to become attached to a property during a tour or open house, but the competition for these houses can be fierce. Don't be discouraged if you lose out on your first or even second option; keep looking! You're sure to find another property that fits you perfectly.
- Keep copies of important documents, such as purchase agreements, closing statements, and warranty information. Although electronic copies can be helpful, having paper copies is useful for future reference and can provide peace of mind in the event of technical difficulties with your digital devices.
How long did the home-buying process take, from start to finish?
The home-buying journey for Noah stretched out over approximately 4-5 months, from initial contact with his real estate agent to finally securing his new house. Between February 28t and October 13, 2023, Noah engaged with his agent's team, applied for a loan, shortlisted properties in his desired areas, and finally secured his dream home. Whilst Noah began actively participating in the house-hunting process in August 2023, his involvment prior to that was minimal, consisting mainly of digitally reviewing his agent's property recommendations and expressing interest in select properties. By August, however, he took a more proactive approach, scouting for listings and touring prospective properties to gain a better understanding of his preferences.
*Identity shielded to protect the interviewee. Dialogue has been slightly modified for better understanding.
Despite the financial aid from his parents, the large down payment of £200,000 limited Noah's property choices, and the unforeseen expenses that arose, Noah was successful in his pursuit of a first home.
