Millennials or Generation Y as they are also called represent the people who were born between the mid-90s and early 2000s. The generally accepted range for millennials being 1981-1996. They come after Generation X and precede Generation Z. As of this year, the millennials represent people between the age of 25 and 40. This means that at the moment, millennials represent a large present of the working people and this comes with a lot of responsibility. They have jobs so they are responsible for themselves. They feed themselves, clothes themselves, and do other things that adults do. At one time or the other, one thing is certain for all millennials and that is the fact that they will all have to get a house. Some will have to rent while others will choose to buy. Buying your first house as a millennial might be quite arduous because of your naivety. This article reveals five tips and tricks that will be helpful for you when you want to buy your first house.
- Clear All Your Debts:
As a millennial, one of the biggest debts that you will have incurred as a millennial is student loans. This is undoubtedly the biggest loan that all millennials are trying to pay off. Statistics show that over 44 million Americans are paying off student loans that total about $1.6 trillion. A huge sum right? This means that each of these 44 million people owes over $36,000. However, student loans are not the only loans that millennials have to pay. According to the National Association of Realtors NAR, after student loans, two other debts that millennials battle with are car loans and credit card debt. Before you buy your first house as a millennial, you need to make sure that you have cleared all of these debts and any other one that you have to pay. After clearing all your debts, it becomes easier for you to save for a down payment for the house. So, the first step is – Clear your debts. Not one, not two, but all of them.
- Begin to Save:
After you have cleared your debts, begin to stack your cash before you go and get a mortgage. Some people are fortunate to have enough money to buy a house, however, most millennials will have to buy their first house with a mortgage. The higher your down payment is, the lower your interest rate. Other than a reduced interest rate, a large down payment will also mean that you will have less debt on your mortgage. Some mortgage lenders will ask people to pay a certain amount aside from their down payment. This amount will act as insurance if they stop paying their mortgage and it is called Private Mortgage Insurance (PMI). If you can save up to 20% of the price of your house, you will be able to waive this fee. It is not advisable to try to buy a house if you do not have a substantial amount to use as a down payment. Decide how much you want to spend on a house and keep saving till you have a considerable percentage of that price.
- Be Unique:
The housing market is a competitive one at the moment. This is because there are more buyers than there are sellers in the market. And you will likely find buyers who have a higher budget than yourself bidding for the same house. To stand out among other buyers, make sure that you get a preapproved loan for your house. A preapproved loan helps to send a message to your seller that you are a serious buyer. Also, do not linger on any process, keep your sellers on their toes so they can take you seriously. Lastly, try to get personal with your sellers. You can do this by writing a handwritten letter explaining why the house is important to you. This will help give you an upper hand among other buyers.
- Find Affordable Houses:
You have a price range, do not stretch beyond that budget. Rather than go for houses that are beyond your range, use online platforms like Lotmix – house and land platform to find affordable houses within your price range. Make sure that the total monthly payment going to your mortgage should not exceed 25% of your monthly income.
- Learn:
Since it is your first house, you know little or nothing about the home acquisition process. So, you need to use this first time to gain experience for yourself. Meet with experts that know the housing industry. Make sure that these experts are willing to answer your questions and put you through all the processes required to secure your house.
Buying a house brings more comfort and peace of mind than renting one. Because after you finish paying your mortgage, the house becomes yours forever. More and more millennials are buying houses from time to time. But it is easy to make a mistake if you are not careful. Use these tips when you want to buy your first house and you will avoid regrets.
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