The One Scary Thing Millennials Should Know Before Buying Their Home
If you're a 30-year-old, thinking about buying your first home, you're right at home among the 36% of millennials that make up your homebuyer's pool.
But if you began adulthood during or after the Great Recession, it might seem a daunting process to purchase a house. Millennial home buying patterns, after all, indicate that saving and being careful about finances are common characteristics among this generation, likely because of their student loan debt burden and the difficulties of finding employment right out of college.
It doesn't have to be scary to buy a home, but you ought to go in prepared. Here is some valuable information to lead you through the purchase process of a place to call your own.
Ask the tough questions
Start by answering the fundamental questions below:
Am I Ready to Become a Homeowner?
Making sure your finances are in order is the first thing you'll want to do. Start by having your credit score checked. There are a variety of ways to do this, and you've certainly seen some commercials. But via Experian, you can get your free FICO® Score and find out what variables affect your credit score, control when your score changes, raise your score and find the right credit cards for you.
You may have some work ahead of you to fix your credit, depending on how your loan report looks. Simple steps, such as paying your bills on time, paying off debt or holding low balances, not opening new accounts and leaving unused credit cards free, but with zero balances, can all make a huge difference to your ranking.
Another method of keeping the ball rolling is reaching out to a lender. Lenders will prequalify you for a loan so that you have a clear understanding of the amount of loan you can get, and how much house you can afford, in turn.
Who Should I Talk To?
You can ask him or her to recommend a lender who can help get you into the best place to buy a home if you're already working with an agent.
How Much Should I Have Saved?
A few of the costs that you can expect to purchase a home include:
- Down payment: Depending on the mortgage form, anywhere from 3.5 percent to 20 percent of your loan amount.
- Closing expenses, moving costs and fees for mortgages: 2% to 5% of your mortgage total
- Repairs, repairs and utilities: These can be volatile, but experts have recommended that 10% to 20% of the cost of the home annually be set aside.
Conventional wisdom suggests that a three- to six-month cushion in the form of an emergency fund should also be saved (enough to cover all living expenses in case of emergencies).