According to the National Association of Realtors, millennials make up the largest share of potential home buyers – about 38% of the total market. However, they are buying fewer homes and often living with their parents or renting with roommates. A lot of millennials are struggling to pay off student debt or find a steady job and save for a down payment. So, if you’re a millennial looking to buy a house, here are few things you take into consideration to make that dream come true.
3 tips for millennial home buyers
• Keep any eye on your debt – an important factor to qualify for a new home is your debt-to-income ratio. Keeping your debt low helps improve this ratio – the lower your debt the more home you can afford.
• Manage your credit – this goes hand-in-hand with keeping an eye on your debt. By paying your monthly obligations each month and keeping your credit card balances low you will not only lower your debt-to-income ratio, but you will increase your credit score. The higher your credit score, the better your interest rate.
• Save your money – Make sure when saving, you plan, not just for the down payment, but also the closing costs, and reserves for unexpected repairs. It is common that during the first few months after moving into a home that older can appliances break, leaks can show up, and other small deficiencies can appear. It is important to plan for these costs prior to purchasing your new home. That way, if these issues do occur, you do not find yourself struggling to cover repairs.
Try to avoid the biggest mistake that you can make:
Living outside of your means – expensive car payments can really hurt a debt-to-income ratio, high rent payments and too many nights eating out can make it tough to save money for that first home. By focusing on saving and cutting expenses, not only will the down payment come easier, but qualifying for a loan will become a breeze.
Should millennial buy homes or not?
Buying a home is the most effective way to grow your net worth and the quicker you can start building equity the faster you can achieve financial freedom. Millennials should absolutely purchase homes; the sooner they move on from renting the better.
If you’re ready to become a homeowner or simply want to chat about the process a bit more with an expert, contact us.