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By Hannah Stevens
Home prices have been skyrocketing beyond the reach of many millenials. Burdened by student loans, most of them are postponing significant milestones like marriage or buying a house. Although not being tied down to one place allows most millennials to pursue lives that are full of travel and exploration, owning a home can present some exciting opportunities and investments for a future life of settling down.
The following tips can help prepare yourself and your budget during your home buying journey.
Are You In A Position To Buy A Home?
Making a bigger down payment reduces the total mortgage amount needed. Set a minimum amount that you want to put for a down payment and save towards it. Although this might seem like the most appropriate first-goal, there are further financial commitments when purchasing a home. Some things to consider are annual property taxes, mortgage interest rates, and the monthly payments you have to commit to.
The best way to figure out if you’re in this position is to seek financial advice from a professional, or simply assess it yourself. Are you looking for a home that you can afford now? Or are you gearing towards a bigger purchase in the future? Both require the security of a steady monthly income to avoid unpaid debts.
The upside of closing a home sooner opens up the door to clear your mortgage debt earlier in your life, owning your own space that can aid in emotional freedom, or at the very least, finally become a morning person.
How’s Your Credit Score?
In 2019, The Lenders Network confirms that the status of your credit score in relation to buying a home can be lenient. Most millennials are convinced that their credit scores aren’t good enough to buy a home. Nevertheless, reports show that there are minimum credit score requirements that all depend on the type of loan. The actionable task you can do is to see what type of mortgage you qualify for.
Contrary to popular belief, you don’t have to be a perfect citizen who pays off their debt monthly. If you’ve experienced a significant drop in credit score, this may play well in your hand. One thing that lenders love to consider is that you can come swim when your boat is sinking. So if you’re struggling to get your FICO score back up, just keep working towards paying off any significant debt prior to buying a home.
You Don’t Have To Buy Your Dream House
As a first-time homebuyer, you might be inclined to go for a bigger house, which will cost you more. You will be better off going for a smaller house, where you can quickly pay off the mortgage and invest in a second home. One way is to consider renting out the first home for a second source of income. In this way, your initial investment can help you pay off the mortgage on your second home.
You may as well find yourself becoming a serious real estate investor with such a strategy.
The Bottomline
It’s okay to feel some discomfort or doubts prior to buying your first home. As long as you continuously plan ahead and place yourself in an optimal position to eventually give a confident home offer, you’ll find yourself enjoying the responsibilities of owning your own property.
In fact, many first-time buyers aren’t exactly in the same property that they first bought. There’s always an ever-changing field of continuous personal growth and financial wins that place you in a more comfortable position in life. So test the waters, before saying no to a wonderful cruise.