The First 3 steps Millennials must take to prepare to buy their first home
- Start Saving. When you start planning for buying your first home having some money in the bank is a must. A recent study showed that 61% of first time home buyers paid for their down payment from their savings. Considering your down payment could be anywhere from 3.5%-20% of the total purchase price, it is unlikely you’ll be able to save that amount over night. Also, most first time home buyers only plan for the down payment; however, there are additional out of pocket costs you’ll need to account for. You may end up paying for the home inspection, appraisal, and in most cases closing costs. You also want to plan for unexpected circumstances not just with the home but your life in general. You don’t want to wipe out your savings to purchase your home and then become unable to work or have a major expense surprise you. It is recommended that you have 6 to 9 months of living expenses in an emergency fund in addition to the costs you are anticipating. ***
- Understand the importance of your credit score. Your credit score affects much more of your life than just whether or not you will qualify for a home loan. Knowing what makes up your score and what your score says about you is crucial. Employers, credit card companies, and many other institutions look at your credit score as a stamp on your financial situation and sometimes your character. There are many free resources online to find out your credit score but keep in mind they are not 100% accurate. Knowing your score and better yet steps to improve it will put you in the fast lane to getting approved for your mortgage.
- Understand the lingo. What is PMI and what does ARM stand for? Of all the processes in your life there may be none more foreign than the processes when it comes to purchasing a home. In an effort to reduce the risk of loaning an incredible sum of money and to keep your information secure home loan paperwork is very… thorough. With that being said you are likely to hear terms that you have never heard before and that may be intimidating. Get familiar with some of the terms you are likely to hear or read by checking online for a mortgage term glossary (vfund.com/glossary) and always make sure to choose a professional loan officer who will take the time to ensure you understand not only the terminology but the process of buying a home. (Click here to find an officer in your area today).
Even if a home purchase seems a few years away it is best to start planning for it now. Not only will you be ahead of the curve on the financial end of things but you will also be more familiar with the process as a whole. Most of the hiccups or horror stories you hear about first time home purchases are due to the fact that the borrower (you) was not educated or prepared for a home purchase. Again, having a professional and experienced lender will help you through the process effortlessly.
*** This is not an offer of credit or commitment to lend. Loans are subject to buyer/property qualification. Loans programs are subject to change without notice. For additional information, please check out my mortgage calculator or call me today.