What You Should Know if You're Buying a Home as a MillennialPosted on Apr 09, 2019
There's a belief among many that millennials aren't interested in becoming homeowners, however, that's simply not true. Millennials are taking that next step all across the country, but there are several who still believe that, though they may want to buy a home, it's just not possible. Thankfully, that's also not true. While millennials do face several obstacles that could stand in the way of their dream of owning a home, that dream is not out of reach. Below you'll find a list of helpful tips to help you know what to do and what to avoid if you want to join your fellow millennials as a homeowner.
Know What You Can Afford
With student debt, credit cards, and other bills stacking up, it's easy to think that you can't afford a house. But, before you panic and throw out your dream of being a homeowner, sit down and do the math. Use the 28/36 rule when you calculate your potential mortgage payment. Which means that your house payment, property taxes, and home insurance shouldn't take up more than 28% of your monthly income. Add any student loans or credit cards you have, and that total shouldn't go above 36% of your income. And now you know what you can responsibly afford. Going above those numbers will put you at risk for missing payments and getting in over your head. If the mortgage payment is too low for the kind of house you want, come up with a budget and start taking steps now to pay off debt so you can afford a better house in the future.
Save for a Down Payment
A common mistake that millennials make is allowing themselves to be enticed by lower down payment options. While it sounds good initially, it can cause problems for you down the road. You should take your time and save up so you can put down as much as possible for the down payment. What you pay at the beginning will determine the duration of your mortgage as well as your monthly rate. Increasing your down payment also makes you eligible for loans with lower interest rates. So, don't rush. The offer of an extremely low down payment may sound appealing, but it will cost you a lot more than it's worth for years to come.
Improve Your Credit Score
Your down payment isn't the only thing factored into your mortgage rates. A higher credit score can get you lower monthly payments. So, again, it's best not to rush. Millennials are waiting longer than previous generations to buy homes, and some think it's because they're not interested, when in reality, they're simply not rushing. So, do the smart thing and take the time you need to get things in order. It's better to have all your ducks in a row and buy a house when you're ready than to take a plunge you're not prepared for and pay for that mistake for years.
If you've taken the necessary steps and are ready to find your dream home, please contact us today. We would love to be a part of this exciting adventure and next chapter of your life.