Millennials and Home Buying: A Guide to Making the Big Purchase
Navigating the Big Purchase: What Millennials Need to Know About Buying a Home
Housing Market Changes: Millennial Buyers Are on the Rise According to MSN money, “the homeownership rate is now rising, in part because Millennials are reaching the age when they’re forming families and settling down.” As Millennials start to occupy a larger portion of buyers in the housing market, the house hunting game is shifting. But for Millennials purchasing homes, there are still a lot of unknowns – so is there a guide for this new group of homebuyers?
Ready to Buy? Here’s What You Need to Know
If you’re a Millennial who’s ready to make the transition from renting to homeownership, first of all, congratulations! Homeownership is an exciting milestone that comes with many important economic and emotional benefits. But the process of buying a home can be daunting, especially if it’s your first time navigating the process. Options is here to help, with our Millennial home buying guide. Here are our top three tips for Millennials to keep in mind when purchasing a home.
Get Your Finances in Check
Let’s talk money; for many, this is the scariest part about buying a home. In fact, according to Zillow Group’s 2016 Consumer Housing Trends Report, “budgeting to buy a house is the top concern for home buyers.” Let’s break things down a bit more:
- Understand whether or not you’re in the position to buy a home: According to SmartAsset, “Lending institutions typically follow the 28/36 rule, which means that your mortgage payment, property taxes, and insurance should not take up any more than 28% of your monthly gross income. Add to that your total debt payments, including college loans and credit card debt, which should not total more than 36% of your gross income.” If a home mortgage is going to push your debits beyond 36%, you’re at a high risk for financial trouble, even if it’s further down the road. So be smart. It’s okay to keep saving and to buy a home later, when it makes more financial sense.
- Figure out the down payment: You’ve heard about the 20% down payment*, but how much do you really have to put down? Today’s financing options are diverse, and buyers typically put down anywhere from 3% to 20% as an initial down payment* on their homes. While putting down as much as you can saves you money in interest costs down the line, don’t over-commit, because there are other costs to consider too.
- Be all-inclusive when you think about cost: There’s more to buying a home than the initial down payment. There are always closing costs, too, and you’ll also want to factor in taxes, property insurance, moving costs, and any renovations you plan to do to your home. These costs add up quickly, so be sure to add these costs to the total amount budgeting for buying a home.
It’s Not Just About the Money
Finding a home that’s a great value is important, but that’s not the only factor you should consider when you’re buying property. Cost is important, but when you’re looking for a home, also be sure to weigh the pros and cons of moving into the home’s neighborhood.
For starters, if you’re a parent, or if you plan to stay in your home long-term and kids are in your prospective future, think about school boundaries. Does your potential home fall within the bounds of a good school district? Even if you’re not planning to have kids, buying a home in a desirable school district will make your property more valuable, and as a result, much easier to sell later on.
Other things you’ll want to think about: is your home located in a neighborhood with low crime statistics? If you rely on public transportation for commuting and daily transit, does the home location offer easy access to a bus line? Remember, even if you love the home for its cost and the looks of the interior, where you live plays a big role in your overall satisfaction.
So consider these additional factors, and maybe even a few extras (access to restaurants, farmers markets, etc.), when you’re buying a home.
Find a Trusted Advisor
Last but not least, don’t go through the home buying process alone. Seek help from a real estate agent, and don’t be afraid to meet with multiple agents to find one that’s the best fit for you. You can start by asking around to find out who your friends and family members used when buying their properties.
Remember – Options is here to help you find the right Realtor, too. We’ll review our trusted Realtor partners to find exactly the right fit for you. Another person you’ll want to enlist in the process of buying a home: a qualified property inspector. An inspector will evaluate the safety of your potential new home, identifying any risks or hazards that you should be aware of.
Finally, we’re here to help too! Options offers a host of useful loan programs that can help you make smart financial decisions when you buy a home. You can also review all of the specialty loan programs that Options offers, and learn more about down payments, as well. If you’re a Millennial who’s ready to buy, reach out! Options would love to help.