5 Millennial Home Buying Tips
June 16, 2021
The millennial generation is at the age where many have begun buying homes. Despite the fact that millennials have been riddled with difficulties like paying back student loans or finding a lasting career with good wages, they continue to make up a large portion of home buyers.
Trends have shown that millennials have taken a slower approach to life than that of their parent’s generation. They’re renting homes and apartments longer, living with their parents longer, and ultimately, they’re buying homes—that are often smaller and more affordable— later in life. If you’re a millennial considering purchasing a house, check out the following tips!
Minimize Your Debt
Before you can purchase a house, your finances need to be in order. As the millennial generation has been stuck with excessive student loan debt, working to pay that off should be the first step of any new home buyer. Banks will consider the debt you have before deciding if they’ll lend you the money to purchase a home.
How Can You Minimize Your Debt Easily?
Work to pay off your debt in a methodical manner. Create a budget that allows you to pay off your debt, pay your living expenses, and save up for a down payment.
Build Your Credit
Your credit will play a role in determining if you get a mortgage and what your mortgage will look like. Before you apply for a mortgage, ensure you have a high enough credit score. You can check your credit score with a free service and then take the steps needed to improve it.
What Are Some Simple Ways to Build Your Credit?
Pay any bills you have in collections, pay new bills on time, and don’t take out any new forms of credit until you’ve raised your score.
Should You Save for a Down Payment Before You Shop for a Home?
If you’ve already been paying off your debt and building your credit, now you need to save for a down payment. Depending on the type of mortgage you receive, you may need to put down anywhere from 3.5 to 20% of the price of the house. To ensure you have enough saved, it’s best to plan on paying 20% for the down payment.
However, to afford a house, you’ll need more money than just that for a down payment. Expect to pay taxes, realtor fees, and more. Plus, as a new homeowner, you’ll need to be ready for any necessary maintenance and repairs.
Is it a Good Idea to Get Pre-Qualified for a Mortgage?
Once you believe you have enough money saved up, get pre-qualified for a mortgage. By speaking with trusted lenders and getting the pre-approval, you’ll know the price range you can afford. Not only will you feel more comfortable with pre-approval, but you’ll also have a better chance of purchasing a home in a competitive market. Sellers will appreciate the fact that you’ve already gone through the process of getting pre-qualified as they know you’re taking things seriously.
Take Your Time to Research and Learn about the Market
Lastly, you need to be patient in your search. The process of buying a home is exhilarating, and you may find several homes that seem perfect for you. However, you can’t rush into anything, especially if you need to build up your savings for a down payment or improve your credit.
Take time to research the market, look at historical prices, future predictions, and explore several areas. Housing prices greatly differ between states, cities, and local communities. Make sure you know what you want in a home and a community and be patient in finding a house that fits your needs. To help the home searching process, speak to a realtor, as they know the ins and outs of the market you are searching in and can help you find the perfect home!
The Bottom Line on Millennial Home Buying
Millennials may have an uphill battle in purchasing a new home, yet they still make up a good portion of current home buyers. Follow the above tips if you’re a millennial trying to purchase a home. If you’re interested in more home buying tips, contact Anne Townes Real Estate today!