Buying Your First Home for Millennials and Gen Z
If you are a Millennial or Gen-Zer, buying your first home is likely one of the top priorities on your list. While you may know that you are ready for a house, you may be wondering what considerations you need to make before getting started on your house hunt. If you are considering buying your first home, the tips below may make the process go more smoothly.
Get Your Credit in Order
Over the past decade, a good credit score has become increasingly important when it comes to a home purchase. Not only will a good credit score help with your chances of being approved for a loan, but it may also help you to secure a much lower interest rate. To get and keep a good credit score, you will need to make sure that you pay all of your bills on time, your credit usage is not close to the limit on the accounts, you have different types of credit, and you have not had a significant amount of recent credit inquiries. You also will want to make sure that your debt is low when compared to your income. If you have student loan debt and the means to pay it off, it would be a good time to do so to help improve your credit.
Get Your Savings in Order
While most first time home buyers understand that they will need to save for a down payment, it is not the only expense to consider. You should consider saving between 3.5% and 20% of the loan’s value. The percentage you will need to save will depend on what type of loans you may qualify for. It is advisable to save as much as possible because sometimes lower down payment percentages may result in having to pay private mortgage insurance each month. You will want to also take into consideration the costs to move, and closing expenses you will be paying out of pocket.
List Your Wants and Needs
To help your house hunting go more smoothly, it is good to create a list of wants and needs when it comes to your house. Your needs should be items you can’t live without and the wants should be items that aren’t exactly deal-breakers. You should provide this information to your broker so that they will be able to better match you with homes as they come on the market.
Follow the tips above to help make the process of buying go a little smoother. Need more information on how to better prepare your finances for the purchase of your first home? Contact us at LPL Financial today. Our experienced staff is ready to answer your questions.
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