Millennials have a bad reputation when it comes to managing their money and committing to big financial decisions. If you’re a millennial, these stereotypes don’t have to apply to you!
Buying a home will provide you more than just a nice background for your next Zoom meeting.
Purchasing a home in your 20s or 30s is a great way to build wealth, secure a stable financial future, and increase your quality of life.
Many millennials are first-time buyers, and the idea of purchasing a home can be overwhelming. However, with a few useful tips, you can make the process go smoothly.
Read on for our top five tips for millennial homebuyers.
#1 Start Saving
You already know purchasing a home is expensive. What you might not know is it’s never too early to start saving for a down payment. Even if you’re planning to rent for the next few years, having homeownership in the back of your mind (and budget), will pay off in the long-run.
Conventional mortgages usually require a down payment of 20%-30%, which is going to require a significant sum—even for the most inexpensive starter home. Don’t wait to start saving. Every dollar you save puts you one step closer to your goal. We know it’s hard to say no to shopping trips or last-minute vacations, but making these sacrifices will pay off.
#2 Take a Good Look at Your Finances
There are many pieces involved in the purchasing-a-home puzzle. Being clear on all aspects of your finances will make the process faster, easier, and more efficient. As you begin thinking about homeownership, you’ll need to take a good look at your finances to see if there are any pertinent issues that need addressing.
Be sure to double-check the following potential problem areas:
- Your credit score
- Outstanding student loans
- Outstanding credit card debt
- IRS issues
#3 Explore All Your Funding Options
Many millennials make the mistake of being unaware of the variety of funding options available to them. There are several options beyond conventional fixed-rate or adjustable-rate mortgages that can be a better fit for millennial buyers. Don’t neglect to research government-backed options such as an FHA loan or a VA purchase loan.
These options offer benefits like low-interest rates and low (or zero) down payments, and many people miss out on these opportunities simply because they don’t know they’re capable of qualifying. Research is one of the most important components of purchasing a home, especially for millennials who are new to navigating the murky waters of loan terms, mortgage payments, and interest rates.
#4 Don’t Hesitate to Ask Questions
No one was born a real estate expert, and even the most seasoned home buyer had to start somewhere. Reaching out for help when you need it will set you up for success.
Don’t hesitate to take advantage of the following resources:
- Your parents
- Financial advisors
- Your bank
- Real estate agents
- Mortgage lenders
#5 Map Out Your Must-Haves
Just because you’re a millennial or a first-time buyer, doesn’t mean you have to settle. While you might not be able to get everything on your wish-list, knowing exactly what you want in your future home will allow you to advocate for yourself and your wishes.
As you determine what you’re looking for in a home, it’s helpful to break your wish list down into the following categories:
- Budget – A perfect home isn’t perfect if you can’t afford it. Crunching the numbers to determine how much house you can afford will allow you to set a realistic budget. Sticking to scoping out options you can afford during the house-hunting process will ensure you don’t get your heart set on something out of your price range.
- Location – As you determine where you want to make your big purchase, there are more factors to consider than you may realize. School districts (even if you don’t have kids yet), predicted real estate market appreciation, and neighborhood safety are all things to keep in mind.
- Amenities – Prioritization is key when it comes to determining what amenities you consider must-haves. In a perfect world, you’d be able to have a big kitchen, floor to ceiling windows, and a backyard pool. In reality, you’ll probably need to focus on just a few features.
Now that you know our top five tips for millennial homebuyers, it’s time to start disproving those pesky millennial stereotypes. Whether you’re in the beginning stages of purchasing a home, or you’ve already found the house of your dreams, you’ll be prepared to meet the challenges of homebuying with ease.