Millennials — or Gen Y’ers — have finally grown up and entered the workforce, and this also means one thing: They’ve started buying houses, too. Recent research by the National Association of Realtors shows that Millennials make up the largest share of home buyers today — with more than 34 percent of all home buyers at age 36 and younger.
If you’re a Millennial who wants to join the ranks of these home buyers, you’re in luck. By securing a mortgage and making a down payment, you can procure a house that is all your own. The following are some helpful tips for getting a mortgage, so you can make the home buying process as stress-free and easy as possible.
Pay Down Your Credit Cards First
Credit score and debt-to-income ratios are both big factors when it comes to securing a mortgage for yourself. For that reason, focus on getting your credit score into GREAT shape before you apply for a mortgage. Spend a year or two paying down or off credit card balances. Lenders will see that you’re a responsible borrower and have very few other debts, which means you’ll be a more attractive potential mortgage-recipient to them.
Visit (or Re-Visit) a Mortgage Broker
Fannie Mae made several big changes to the mortgage-procuring process as of July 29, 2017. So, if you’ve never consulted with a mortgage broker before, or you have but not since July, consider visiting again. One of the big changes made is the way that student loans are calculated into the debt-to-income ratio, which makes it easier for millennials with student loan debt to buy a home.
Get Pre-approved for a Mortgage
To make the home buying process less stressful and energy-consuming, you can get pre-approved for a mortgage — even before you find the home you want to buy. When you get pre-approved, you meet with a lender who reviews your financial documents and lets you know what kind of home you can afford. Then, you can go into the housing process informed and not waste time looking at houses you won’t be able to afford in the long run.
Don’t Forget Closing Costs
When you’re deciding what you can afford for a first house, don’t forget to factor in closing costs. Many first-time home buyers calculate what they’ll owe for the down payment, as well as the mortgage payments, but they forget that the other costs associated with purchasing a home. Calculate how much you can afford for a down payment and closing costs before you start shopping, and that way you’re not caught off guard when the purchasing process actually begins.
Consider an FHA Loan Instead of a Traditional Mortgage
Traditional wisdom says you should make a 20% down payment when you purchase a house. However, if you’re a first-time, millennial home buyer, you may consider getting a Federal Housing Authority loan to make your down payment — which means you’ll just need to put down 3.5% of the purchase price. These FHA loans can help speed up the home buying process for millennials who don’t have as much cash saved up in the bank. You can get in touch with a HUD-approved housing counselor to discuss your options on the HUD website.
If you are a first time home buyer in the Carlsbad area, get in touch with Blue Fire Mortgage. We can help you get the cash you need for your home, so you can start building a settled, comfortable, fulfilling life.