By Sharon Bloudek, March 16, 2020
A lack of affordable homes in urban areas. High student loan debt. Difficulty qualifying for a loan. These are just a few of the reasons millennials aren’t buying homes at the same rate as Generation Xers and baby boomers before them. However, experts believe it’s not that millennials don’t want to buy homes. It’s just that they’re taking a little longer to do so. In fact, millennials are poised to become the fastest-growing group of new homeowners.
If you’re thinking about buying your first home (or hey! even if you’re thinking about buying your fourth home!) here are some essential tips to prepare for this important (and exciting) step:
- Get your debt under control. Student loans, car loans, credit card debt. Whatever debt you have, make a concerted effort to pay down as much debt as you can before you consider buying a home. There are a variety of strategies for how to approach paying off debt. Research and consider which approach makes the most sense for your situation. Then make a plan, and stick to it! Remember: decreasing your debt increases the likelihood that you’ll qualify for a favorable home loan. Plus, the process of paying off debt improves your overall credit score—which also helps in your loan application process.
- Strive for steady employment. As a group, millennials are more likely to be entrepreneurs. Millennials are also more likely to move between jobs than older generations. However, when it comes to qualifying for a home loan, lenders like to see that you have a steady and reliable source of income. If homeownership is your goal, be aware that sticking with one employer for a period of time could prove beneficial.
- Squirrel away savings. At this point, you might be thinking, “Yikes. So I’m supposed to pay off debt AND save at the same time?!” Well, yes. And that can be hard to do. I get it. But there are a lot of reasons to build a nest egg. For starters, the process of buying a home requires some up-front cash. You’ll need to have funds available for escrow. You’ll need to pay for a home inspection (money that is very well spent!). You’ll need a down payment; the precise amount depends on the type of loan you get, and if you intend to purchase private mortgage insurance. And, you want to be prepared for the myriad expenses that come with home ownership. You might need to purchase a lawnmower. You might need to purchase a new water heater. At some point, you might be faced with a bigger purchase, like a new roof. A healthy savings account gives you a level of security and comfort as you take this next big step toward owning a home.
- Be ready to settle down. No, buying a home doesn’t mean that you surrender your sense of adventure! You’re still the same fun-loving, adventurous person you’ve always been. But in financial terms, if you’re going to buy a home, try to think ahead a few years. Do you see yourself being happy in the same neighborhood in the same city for at least 2–3 years?
- Balance what you want with what is realistic. When you think you’re ready to take the leap, start to gather information needed to make an informed decision. Get pre-approved for a mortgage so you know what you can afford. (Hint: the highest number you qualify for isn’t necessarily the same as your maximum budget. Think about what is truly affordable!) Research the neighborhoods you love the most. How’s the commute? Are the types of homes you like in the areas you like within your budget? What concessions might you need to make?
And finally: it’s important to have a team you trust to walk with you through the home-buying process. If you think you’re ready to make the step toward homeownership, let’s chat! From connecting you with reputable lenders to making an offer to handing you the keys to your new home, I’m here to work with you every step of the way. Here’s my cell phone – 503-701-1000.