Say what you want about millennials but the truth is, they are a forced to be reckoned with in the world today. I myself am a millennial and like most others my age, the time for big decisions has come! As far as real estate goes, many millennials are wondering if it is the right time to buy a home. Regardless of the myths associated with owning a home or the doom and gloom theorist of a market crash, owning a home is one of the largest and most significant investments you will make in you lifetime. Like any home buyer, we millennials need to consider a few things before we take the plunge into home ownership.
Here are FIVE things millennials need to consider before they buy their first home:
#1 Do I have a steady job/income?
Besides the obvious reason for the importance of a steady income to pay the mortgage, most lenders will not approve you without one. So if you don’t quite have the work history right now, it may not be the best time to apply for a mortgage. If this your situation, it not only gives your the opportunity to work on your resume but it also gives you the chance to solidify your overall financial picture as well. Establish good report and credit scores. This will help you be fully prepared to apply for a mortgage when the time is right!
#2 Is my credit good enough?
Your credit score is a major player in your financial picture. Maybe you have had those small credit cards that you responsibly use and pay off monthly for a while now. That has helped you build some credit history and bolster your overall score. However, if you have multiple cards with high balances, it could now have negatively effected your score. This could spell trouble when you are trying to purchase a home. Get familiar with your credit score and get take steps to repair trouble areas. There are plenty of programs available to first time home buyers that allow scores as low as 620-630 depending on the income you can show. Contact me at firstname.lastname@example.org to learn more about the programs.
#3 Have I saved enough money?
For some mortgages, you will need at least 20% down. However, there are programs available to aid with down payment such as FHA programs that allow as little as 0-5% down. In those cases, the home owner would have to pay a PMI (private mortgage insurance) until they have successfully paid off 20% on the mortgage. There are other expenses related to the closing of a home as well. Things such as inspections, home warranties, and title costs to name a few. It is important to understand how the process works from start to finish so you can have a better understanding of what kind of money you will need to successfully close on your first home.
#4 Is it time to settle down?
This is a big questions for us millennials. Jobs now give us the flexibility to work from home and remote locations. This has allowed more people than ever the freedom to just get up and move with little restrictions. If this is still you, maybe this isn’t the best time to purchase a home. They are fantastic assets but not a very liquid one. Sure, you can end up leasing your purchased home to tenants, but I recommend you consider your options first before you go down that path. Either way, figure out where you at in your life right now and if owning a home makes sense for your future and 5 year ambitions.
#5 What kind of home do I want?
Assuming you have your finances in order as well as a stable job, it is time to consider the kind of home your first will be. Here is where you need to think short and long term. Maybe you are single right now and you have a very specific style in mind. Maybe something hip and modern in the city like a small condo. If you can see yourself meeting a future spouse and growing a family in the future, maybe that space is better rented for now. Enjoy it, and when the time is right, you can look for a Single Family home in the suburbs. This is all up to you and what makes the most sense for how you see your life in next five to ten years.
If you have considered these five things and believe you are ready, it may be the right time to buy your first home! I would love to help you find your first home! You can reach out to me at email@example.com or set up an appointment by clicking on the tab at the top of this page!