The Millennial generation is emerging in the home-buying market. Homeownership is a dream many Americans share, but the purchasing process can be overwhelming for first-time homebuyers. Here are a few tips to help guide first-time Millennial buyers find their perfect home.
- Set a Budget
After you’ve decided you’re done with the renting game, it’s time to carefully plan what kind of home would match your needs and budget. The first, and most important, step is to identify exactly how much you can spend on a home. One way to determine this is by using the 28/36 Rule for calculating the amount of debt that can be taken on by an individual or household.Meaning, spending no more than 28 percent of your gross monthly income on housing expenses. Common housing expenses include your monthly mortgage, property taxes, and home insurance payments. The 36 percent represents the rest of your total amount of extraneous debt owed per month. Some lending companies take this rule into consideration during the pre-approval process before granting home loans.
Online free mortgage calculators can be a helpful tool to help estimate your monthly payment in relation to total cost of the homes you’re looking at, while also giving you a broad idea of what you can afford. For a more accurate calculation, it’s important to speak with a licensed professional mortgage lender to know exactly what you can afford.
- Understand the Financials
Once you know your budget, it’s time to get your personal financials in order. It is always recommended to stay on top of your credit score. Even small improvements to your score can alter your loan interest rate.Be informed on the different loan options and the long-term impacts of each. First-time Millennial homeowners can especially benefit from several specialized low-interest mortgage rates and tax credits. However, these mortgages also come with some limitations. For instance, the USDA offers down payment-free mortgage for first-time homeowners, but limits this benefit to only those buying in limited to rural areas.
There is also the option of whether an adjustable or fixed interest rate mortgage is best for you. Adjustable interest rates tend to be lower, but there’s no guarantee that they won’t increase over the duration of the loan. Fixed interest rates carry less risk, but often come with higher monthly payments. It is true of which ever type you choose that the more you invest in your down payment, in relation to the cost of the property, the less you need to borrow and the lower your monthly payment.
- Know Your Goals
Once you have a clear understanding of the financial details and your overall budget, it’s time to narrow down your choices. Stay organized by creating a list of all your wants in a home and then prioritize these items by importance. Some variables to consider are the number of bedrooms, the total living space, the size of the property, and the availability of outdoor space or storage.
- Find a Realtor
Congratulations, you’re one step closer to owning your own home! With your budget and wish list in-hand, it’s now time to select a realtor that best understands what you’re looking for in a home. A good realtor can provide a first-time Millennial buyer advice on anything connected to the process, from getting a mortgage to potential renovation or repair work needed in each home.
- Shop Around
With a realtor on your side, it’s time to start shopping around. Here, the exact nature of the process is up to you. You can let the professional seek out potential fits for you, or do some research on your own using online tools. Either way, the goal is to walk through homes that fit both your budget and goals.
- Consider the True Costs
After you’ve found a home that seems like it could be a great fit, you then need to make sure you understand the full responsibility of purchasing that home. That includes not only property taxes, but also potential renovation or immediate repair costs needed before you can move in. Put simply, two identically-priced homes will have a very different value if one is move-in ready, and the other needs new flooring or windows before it becomes livable. Depending on what you’re looking for, having the opportunity to customize your home right away may seem exciting, but not necessarily budget friendly.
- Sign the Dotted Line
You’ve now found home, analyzed its long-term practicality and you’re sold. Now, it’s time to arrange a home inspection, finalize your mortgage, secure home insurance, and close the deal. Through each of these steps, your realtor will help to make sure that everything is done correctly, and according to your needs.New to the market? Check out the extensive property search powered by Summa Realty! Millennials looking for their first home will be able to contact a Summa agent the moment their dream home becomes available! The wants and needs of our clients comes first. So, when you purchase your first home you can be confident that you found the right home for you for the best price.