When it comes to home buying, many Millennials (the term used for Generations X and Y) count themselves out. With the average student loan debt climbing year after year, entry level incomes remaining stagnant, and the housing market continuing to rebuild, many young home buyers aren’t convinced that homeownership is in the cards for them just yet.
However, there are still ways that plenty of young adults are able to purchase a home comfortably and stress-free. Home buying Millennials are growing in numbers, and as a result, you are changing the way lenders do business. Gone are the days where down payments must be steadfastly 20 percent or higher, and credit scores need to be picture perfect. There are now a variety of loan programs available to Millennials and other first-time homebuyers that enable you to purchase your dream (starter) home without emptying your life savings. Even with more loan options open to these fresh homebuyers, here are 5 tips to keep in mind to make sure the process comes smoothly:
- Recognize your options
While conventional loans still hold strict requirements for applicants, more and more lenders are now offering programs that cater to borrowers, such as Millennials. Government-backed mortgages like the FHA loan come with lower required down payments and acceptable credit scores. At the same time, the change in the way Fannie Mae evaluates trended credit data opens even more doors for borrowers with small but trustworthy credit histories. (You can read more about the change here.)
With this, eligible borrowers are able to come closer to owning a home than originally thought.
- Seek advice
Browsing the internet for information is important. However, it should only come second to actively seeking the advice of a mortgage professional. By taking the extra step to talk to a mortgage broker, you can get a better understanding of your status as it relates to your potential homeownership. How much of a house can you really afford? What other expenses come with purchasing a mortgage? Which loan type is best for you?
Speaking with someone who has a thorough understanding and experience handling mortgages will be immensely more beneficial than anything that you find on the internet.
But, this blog post comes in at a close second.
- Make a Wishlist
What do you really want from your future home? Are you more excited about space or location? Can you handle a long commute to work, or is having everything in one area more important? Realistically, where can you see yourself with the current job you have in the city you live in?
Making a list of what you’re truly looking for in a home can help you narrow down your search when it comes to physically looking, ultimately saving you time and money.
- Think long-term
“Why am I buying a house?”
This is one important question to ask yourself before you begin the buying process.
If you cannot answer this right away in a reasonable and responsible manner, you may want to take a step back. Purchasing a home is both a big deal and big commitment. It’s important to think of where you’ll be in the upcoming years, because odds are, you’ll be dealing with the same house.
Whether you’re looking at your potential home as a starter, or are deciding on an extended stay, you need to plan. If you’re looking to move out of the city you’re currently in in less than a year, purchasing a home is probably not the right move. However, if you’re looking to move upward in your job and know that you’ll be around for the next ten years, you may want to invest your money in more than rent.
- Be patient
Serious decisions take time; and home buying classifies as one of the most serious ones you can make. Rushing through the process can cause you to be impulsive, resulting in mistakes. The process is thorough and long for a reason—you want to be sure. After all, at the end of everything, you want to be confident in every decision you’ve made along the way, from the loan amount you’ve taken to the home you’ve purchased. Regret is one feeling you want to avoid during this time.
For many, a part of the “American Dream” involves homeownership. The good thing about these flexible loan programs is that, even with student loan debt, you are still able to make moves toward this goal, should it be one of yours. As long as you are effectively paying down debts, maintaining a good credit score and continuously adding to your savings, you should be able to see yourself in the running for homeownership sooner than you think.
Are you ready to take the next step into becoming a homeowner? Click here to begin your loan application now!