3 Tips To Help Millenials Become Homeowners
By Kurt Real Estate Nov 23, 2019
Despite the interest rate hike, 2017 looks to be the year to buy for many young renters hoping to become homeowners. The concept of buying your first home is exciting, but the reality of it can be terrifying. Overwhelming amounts of student loan debt and higher rent rates have slowly crushed the home-buying dreams of many Millennials. However, there is hope in sight. Here are a few key tips to help you get there.
1. Build great credit. Of course the objective when securing a mortgage is getting the lowest interest rate possible. This relies heavily on your credit score. Paying your bills on time, paying off credit cards, and consistently contributing to your student loan debt will all help strengthen your credit. Order a copy of your credit report before you start applying for a mortgage so you aren’t caught off guard if your score isn’t where you expected it to be.
2. Aim for a large down payment. Try to avoid committing anything less than 20 percent. The reason here is twofold. First, if you put less than 20 percent down, you have to pay private mortgage insurance. Second, the less you’re willing to put down, the lower a lender’s confidence will be in your ability to pay off the loan. Therefore, your interest rate will likely be higher and the amount they offer to lend you may be lower.
3. Research all the additional costs. Buying a home doesn’t just boil down to a down payment and mortgage. Unlike renting, there are added costs associated with buying and owning a home such as: a transaction coordinator fee, home inspection fee, homeowners insurance, home warranty, closing costs, and ongoing maintenance costs. Educate yourself as to how much you should expect to pay above and beyond the price of the home.
Mortgage capacity, you’re ability to afford a certain amount for a home based on your debt-to-income-ratio, is the most important part of buying a home. If a lender finds you to be a risky investment, buying a home may be out of reach. Continue to strengthen your credit and save, save, save. The pay-off will be worth it in the end when you find yourself in your first home.
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