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When you think “millennial generation”, you think educated, tech-savvy and fairly decisive. Furthermore, this generation is seeming to be a group deciding that their 20’s - early 30’s is the prime time to buy their first home.
In today’s world, there are TONS of resources through the internet on just about any subject you are researching, but sometimes, the “click and glance” method isn’t the smartest way to get your into your first home --Instead, give these five tried and true tips a shot and feel confident on how to buy your first home:
1. Are you ready for the commitment?
It has been said time and time again, buying a home is arguably the largest purchase you will make in your entire life. What does this mean? You should be confident that you are ready for that type of commitment. If you are the “Instant gratification” type but have a tendency to tire of things easily, it is important to know that there is a time-frame to recoup the cost of your purchase regardless of the market trends. In that case, you can expect to stay in this home for 3-5 years to gain equity and avoid unnecessary expenses.
Buying a home also means you’re ready for the responsibility of upkeep. to maintain your home. Some typical homeowner’s responsibilities include things such as, replacing smoke alarm batteries, maintaining landscaping and changing air filters in your heating/cooling system.
2. Knowing your finances
When the time comes, you should meet with a lender to begin the prequalification process for obtaining a loan. The lending institution will consider all aspects of your finances including your salary, bills, spending habits and debt to income ratio. The bank will require this information, so this should serve as a motivator to focus on your finances. Evaluate what you have coming in and what you are spending and realistically consider how much you have to devote to a monthly mortgage payment.
In your budgeting, you should also consider that owning a home is associated with miscellaneous fees such as homeowners insurance, property taxes, Homeowners Association fees (if applicable) and an emergency fund to cover routine maintenance or unexpected home repairs.
3. Consider Credit and Savings
By your mid-twenties, it is safe to say that you have probably established some form of credit and hopefully it’s good credit. Lenders do closely consider your credit score in the mortgage approval process. How does your credit score affect your loan? The rule of thumb for this is, a better interest rate is a reflection of a higher credit score. In preparation for buying a home, your savings should also be of consideration. Money in hand is necessary to cover things such as earnest money deposits, down-payment and closing costs.
4. Start the Pre-approval process
I am sure you have gathered by this point, a huge part of purchasing a home is a financial process. This means most of the home buying process is based on the time it takes to obtain a mortgage. As you know, lenders will consider your bank statements, bills, salary, spending habits, credit and additional criteria, but it is extremely smart to speak with multiple banks before settling on the institution you work with.
In the same way that no two buyers are the same, neither are lenders. Some may vary on credit requirement and be more forgiving when it comes to credit history. Some credit unions where you have established membership may offer lower rates than non-member institutions. The federal government also overs FHA and VA loans that may be great options for first-time home buyers.
5. Work with an Agent You Trust
The final thing to consider in the home-buying process is hiring a real estate agent that you trust. Better to have professional knowledge and representation than trying to maneuver through the process blind. Real estate agents have the training and resources to lead first time home buyers to the perfect home for them! From the initial stages of developing your “must-haves” list to realizing your long-term goals for your first purchase, they provide input based on experience to ensure you are comfortable with your decision. They will perform home searches, guide you through showings and assist with offering on a home. They will negotiate a contract for you and walk you through the entire closing process. When it comes to the home buying process the DIY way is not the smartest way. If you decide the time is right to buy a home contact an experienced real estate group to help you through the entire home buying process from start to finish!
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