Despite the recession of the economy that has caused struggles and frustrations in the real estate market, a first time home buyer should not turn off and lose the idea of owning a home. The tips below play a significant role in helping you be patient, get prepared and choose a mortgage that you are ready and willing to take on.
Pay off small debts.
Smaller debts like students loan and consumer debts have postponed the dreams of many millennial who have the desire to own homes. Before even thinking of applying for a pre-approval home loan, you need to pay off all the small debts that might be a challenge in the home buying process. Since home buying is an expensive commitment that involves a massive amount of money, you need to be debt free. It is only when you are debt free you will be able to take on another challenge: down payment for the home buying.
Set a budget
Once you have paid the small debts that might be a block on your way to owning a home, the next thing is to establish a budget. Look for what you can afford and not what you think you can. Select a mortgage whose monthly payment, homeowners insurance and taxes are less than 25% of your monthly income after taxes. Setting a budget will help in settling your debts in a natural way and without straining.
Build up savings
Building savings is a crucial step to take if you need to have a home with no frustrations. As soon as you put the idea of buying a home in your mind, you need to start saving regularly. You need money for down payment, home inspection, possible closing costs, and surprise expenses. In additional you require emergency funds build up. Most millennials do not pay cash for their first homes. Most of them buy with mortgages. Having good savings not only helps in lowering your interest rates but also helps you in paying your mortgage faster. Planning well for savings will aid significantly in avoiding private mortgage insurance loans.
Get pre-approved for a home loan
Before making a step in buying buy a home, it is vital to get pre-approved for a home loan. Getting pre-approved sends a powerful message to the home sellers that you are a serious home buyer. The pre-approved loan also means your lender has evaluated your finances and concluded you could cover your mortgage payments and all the down payments. Also, be sure to look for a house within your pre-approval rate as there is no fun in spending up to the last dollar you have. You will get yourself in a big financial crisis if you go for a house beyond your pre-approval rate.
Identify great locations and neighborhoods
Great places and community play a significant role in how much you will sell your property several years down the line primarily because of its characteristics and attributes. Most first time buyers have no idea how much location can affect the value of your home. While you are likely to fall in love with some neighborhoods because of their lovely characteristics and reputation, it is vital to understand how to pick blocks. If a home location is next to the main road or next to a gas station, you may experience difficulties when you need to sell it in the future. Availability of schools, low crime rates and having major conveniences nearby your home is vital when considering the location of a home.
Decide on what type of a house makes sense to you.
As a potential property owner, deciding whether a home or a condo is better when making a home buying decision is among the challenges you are likely to face. Understanding your schedules will help you in making the right decision. Things like having kids who need a yard to play, traveling a lot and don’t have time for property maintenance, likelihood that you will need a garden, interest in having some perks like gym and swimming pool are some things that will help in making the ideal decision as a millennial home buyer.
The Verdict
Being a homeowner is a commitment and requires hand work. However, there is nothing that makes you feel good than knowing you are out there and you are making it on your own. You have freedom to do whatever you want, and most importantly the landlord won’t stop by to ask for rent. If you need a home as a first time home buyer, tips above goes a long way in helping you own a house.
