by As a millennial, you succeeded against all expectations! You managed to save enough money to buy a house despite the worst economic downturn in modern history. Within seven business days, you should get your participation trophy in the mail.
Truly, purchasing a home signifies a remarkable achievement and ushers in a thrilling new phase of your life. But it’s also possible for it to be perplexing and nerve-wracking. Find out what to anticipate and how to proceed with these helpful hints for first-time homebuyers.
Before anything else, verify your credit score
In fact, before you even think about applying for a mortgage, you should look into your credit score. You need to show the bank that you’re reliable and have a steady income before they’ll give you a mortgage. Your credit score is their primary metric.
A decent mortgage requires a score of 620, with higher scores preferred. A lower interest rate and, by extension, a substantially reduced monthly house payment are both possible outcomes of a high credit score, which indicates your financial soundness. You can learn more about credit report monitoring from trusted financial sources.
Establish your budget
Some real estate websites list properties for $1 million or more, but just because you like looking at them doesn’t mean you can afford one. Just because you have excellent credit doesn’t mean you should get pre-approved for a mortgage that’s too expensive. Finding out how much you can afford is entirely up to you.
Your monthly mortgage payment should include not just the principal but also any applicable escrow fees, homeowner’s insurance, and mortgage insurance. For more financial planning guidance, visit NerdWallet’s home affordability calculator.
Find out if your loan is pre-approved
Find a reliable mortgage broker and let them help you shop around for the best deal for your needs. There is no universally applicable lending program because every homebuyer has unique requirements and priorities (no mortgage insurance, modest down payment, etc.).
Investigate your choices thoroughly, paying close attention to the details of each offer. You can also read first-time home loan tips (example.com) to compare mortgage types and interest options before committing.
Have you set aside enough money for a down payment?
Take out whatever non-liquid assets you have if your savings, investments, or other sources provide a down payment. You must prove you have the money you claim to have because your mortgage lender will thoroughly search your bank records.
Put your planned spending in one savings account (preferably inaccessible) and withdraw it from all other sources. It is important to have cash accessible when you are ready to close on your new house.
Reduce expenses even more
As a young person who feels undervalued and underpaid, saving up for a down payment is a huge accomplishment, but that’s not all you have to worry about. In order to avoid any unpleasant surprises, set aside some money before you begin house hunting.
You can also check out budget tips for first-time homebuyers (example.com) to learn ways to cut unnecessary expenses before purchasing.
Get the facts
Now that we’ve taken care of the money for the time being, let the games begin. Your ideal home is almost within reach. However, not all dream homes have the same construction or cost. Do some research to find out where you want to focus your house search.
Interested in being able to stroll downtown? Find out how much houses cost in the city’s vicinity. Want good school districts? Visit GreatSchools.org to research neighborhood education ratings.
Compile an Essentials List
You have identified your target zones and have a good idea of the types of homes that would be feasible to purchase within them. At this point, you need to decide what essentials your new home must include. Creating a “must-haves” and “like-to-haves” list is the greatest piece of advice.
Locate a Reliable Landlord
Choose a buyer’s agent with caution. Someone who is aware that they are representing you is ideal. Despite any commission, they will be your advocate and help you buy the home of your dreams at a fair price if they are competent.
For professional guidance, visit National Association of Realtors to find certified agents in your area.
Have an initial conversation about purchasing
As easy as it sounds, finding a house, making an offer, and moving in isn’t. In order to make a smart investment, you must follow all of the necessary procedures. You didn’t save all this money by working three jobs, only to find yourself in a financial bind.
Get all the answers you can
Inquire about anything and everything that comes to mind as you go through the purchasing process. So what if your question seems foolish? Just ask. Make sure you understand all steps, as this is a long-term financial commitment.
Discover How Much Your Closing Expenses and Inspections Could Cost
Your mortgage broker and you have likely already gone over the down payment amount, but that isn’t everything you’ll need to finalize the purchase. There are a number of costly inspections that the state requires of your home before closing.
Read Consumer Financial Protection Bureau home closing guide to understand closing costs and your legal protections as a buyer.
Get your real estate agent to set up an MLS search
Due to its near-real-time updates, an MLS search outperforms the most popular real estate websites. To access the Multiple Listing Service (MLS), you must be a licensed agent, so they will need to set it up for you.
For better search optimization and local listings, check Zillow and Realtor.com regularly to compare new opportunities.
Schedule a few showings
You can narrow down your search for a new house in the MLS by entering your criteria (location, price range, square footage, etc.). Get in touch with your real estate agent as soon as you locate a few that catch your eye so they can arrange a viewing.
Make Notation
To help you recall the details of each house, make notes as you go along. You can even use digital tools like Google Keep or Notion to record your impressions.
Present a Proposal
Collaborate closely with your real estate agent on this; they may research other homes in the area that are similar to the one the sellers are selling and determine if the asking price is fair.
Come to an agreement through negotiation
Despite your best efforts, your first offer may not be the last. While you’re at it, consider your house budget. Work with your agent to reach an agreement that benefits both sides.
Purchase a policy for your residence
Before closing, you should get homeowner’s insurance, as your mortgage lender will likely insist on it and may have specific coverage requirements. Learn about coverage types at Policygenius or Allstate to compare homeowner insurance policies.
Be prepared to put your name on it
Your real estate agent, mortgage lender, title company, and closing attorney (if applicable) will all be present at the closing. After you pay the closing fees, you’ll become a homeowner! Visit homeownership basics (example.com) for advice on what to do after you move in.
I love your brand-new house!
You succeeded! Finally, after what seems like an eternity of saving up and enduring the home-buying process, you can call yourself a millennial homeowner. Celebrate your success and revel in the fact that you accomplished what many your age consider impossible.
Now, keep learning how to maintain and improve your property. For beginner-friendly guides, check HGTV’s home maintenance tips and DIY home improvement guide (example.com).
