Millennials, Oh millennials. They get such a bad rep but the truth is, they’re educated, technologically savvy, love to travel the world and have big dreams. New research shows that the
How To Buy A Home As A TwentySomething
Millennials, Oh millennials. They get such a bad rep but the truth is, they’re educated, technologically savvy, love to travel the world and have big dreams. New research shows that the millennial generation is getting ready to settle down and become home owners. We have compiled a short list of ‘To-Do’s’ before you get started:
1. It is a commitment:
You’ve heard it before (possibly because it’s true) purchasing a home is going to be the biggest purchase you’ll make in your lifetime. Is it worth it? ABSOLUTELY! Now we get it, Millennials are known to have been infected with the ‘travel bug’ and although that is all fun and games, purchasing a home is a serious commitment. In our experience most of our first time home buyers keep their home for an average of 5 years. Our clients typically build enough equity in that time and decide to sell their first home and purchase a larger or newer home.
2. Finances 101:
When you decide you are ready to buy your home, your lender (the institution lending you the money to purchase your property) will consider every part of your financial situation. They will look at your salary, your monthly bills, and spending habits. It is important that you give yourself a financial checkup just to make sure you are aware of your spending habits and start working towards saving for a down payment.
One thing I like to encourage my clients to do is to print their monthly bank statements and figure out how much money is spent on monthly bills (IE: rent, car payment, student loan, electricity, cell phone), how much is spent on necessities (IE: food, gas, toiletries) and how much of it is fun money (IE: restaurants, Starbucks, booze). In my experience most people are shocked what they learn about their spending habits. I’ll give you an example, my sister LOVES coffee, we did this exercise and she learned she was spending close to $200 on coffee per month!! She was shook. She decided to ditch her expensive Starbucks habit, bought herself a Keurig and has been drinking homemade brew ever since. She still has her occasional Starbucks macchiato, but now getting a store bought coffee is a treat!
Identifying your money guzzlers (as I call them) will be very helpful and eye-opening. This will help you set a budget and get you on your way to saving towards a home. Though coffee doesn’t sound like a big deal, my sister was spending close to $2400 per year just on coffee!! What do your spending habits look like?
3. Credit and Savings, Oh My! :
Lenders will consider your credit score when approving you for a mortgage loan. They will ask for pay stubs, bank statements, W2 or 1099, retirement funds (like your 401K), and more. These guys really delve deep into figuring out if you are trustworthy enough to lend to.
Your credit score is so important, remember – the better your credit score, the better interest rate you’ll be offered and more financial programs you will likely qualify for. This is a good time to take a close look at your debt. Pay off as much as you can, and do not acquire more.
In addition to your credit, savings are extremely important. When you’re buying a home, you’ll need to have money in-hand to cover fees like your down payment, inspection fees, appraisal fees and closing costs.
4. Get Preapproved with a Lender:
Getting preapproved sets the stage for your price range (which determines what homes you’re able to afford), educates you on financing programs available, and your future mortgage payment.
With so many lending programs available it is important to meet with an experienced and knowledgeable lender. If you are interested in getting started give us a call, we can refer you to our trusted lender and get the process started. Or perhaps you feel you are not ready at this time, our team can help and guide you in creating an action plan.
5. Hire Us:
This is one area where we would not advise following a DIY/Pinterest approach. As professional real estate agents we are licensed and have the experience to guide and assist home buyers to a home that’s right for them. During our buyer consultation appointment we will help you make up your “needs and wants” list; we’ll help you consider your long-term goals; and, we’ll search for homes, show you homes, negotiate and walk you through the entire offer and closing process… right down to the point where those new home keys fall into your hands. Call us today! 951.428.4383.
Your Friendly Realtors,
Fernando and Sonia Vasquez