It is a great time to be a millennial and to be in the market for a new home. Did you know that for the past 6 years millennials have been ranked as the generation that is most active in the housing market according to the National Association of Realtor’s Home Buyer and Seller Generational Trends. (See National Association of Realtors). Below are helpful tips for millennials and becoming homeowners!

Having Good Credit:

Your credit score can affect what loan options are available to you, your monthly payments, and your mortgage insurance payments. Maintaining a high credit score will make it easier to qualify for a loan and get you into the best possible home and mortgage program. Keeping your credit score in check can seem complicated, but the most significant factor for your credit score is your payment history. This means making payments on time and in full to keep your score up. Another tip is to be cautious of what types of credit you are opening, some cards and other accounts have higher interest rates and could affect your score. For more advice on your credit score, check our resource here.

Employment History:

While many lenders like to see at least 2 years of employment when approving a loan, buying a home with a new job isn’t impossible. Lenders have procedures in place to work with applicants who are just starting out in their careers. Often, your lender can look at things such as obtaining a degree in the field you are now working in, or will be working in, and count that 4-year degree as work history. Depending on the loan type and your personal situation, 2 years of employment history might not be required to get you in a home, ask your lender to look at your situation.

Manage Your Student Loans:

Student loans are more prevalent today than ever and consistently impede millennials from buying a home. A big part of the loan approval process includes a debt to income (DTI) ratio assessment. It is important to consolidate your debts when getting ready to buy a home. To get your DTI in check, bring your financial information to a lender. They can help you know where you stand and some steps to help you manage your student loans.

Save Up for a Down Payment:

A house will be one of the biggest purchases you will make in your life. Most homes are purchased with a mortgage loan as opposed to buying with cash. A mortgage loan can help homeownership be more affordable since it is much like paying rent or another monthly payment. Having a down payment when purchasing a home is typically required and can save you money in the long run. Down payments typically range from 3.5% to 20% depending on the loan type that you choose. There are some zero-down programs out there, but they do have restrictions. The larger the down payment, the less you pay over the lifetime of the loan, and the better the interest rate you can get for your loan.

Get Pre-approved:

Getting pre-approved can save you time and help you find an awesome home a lot quicker than trying to figure out your budget on your own. Your lender will consider all of the points we have listed above, among other things like income, and tell you the parameters of the home you can afford. After meeting with your lender and if you get that pre-approval, you can start to look for homes in your price range. This can also be an incentive to the seller because they will know that your loan is likely to get approved in the end because you had been pre-approved for that price range.

Make an Offer that Stands Out:

Getting pre-approved is the first thing that you can do to help your offer stand out to a seller. Showing a seller that you have a pre-approval can create a sense of security and confidence in you, as a buyer. It helps them know that you are serious.

Another thing you can do is send them a handwritten letter about why you would be a good candidate for the home. Selling a home is often just as emotional and stressful as buying a home because sellers are leaving a home that, many times, has meant a lot to them. Let them know about your family and how you will treat the house and what about the house you enjoyed.

Find Home Buying Professionals You Can Trust:

It is important to find a lender and real estate agent who are well versed in the market and who have your wants and needs in mind when buying a home. At First Colony Mortgage, we know that you will be able to find someone that fits with your personality, and will help you through the finance process. If you need, our mortgage professionals can also make recommendations of a great real estate agent. We promise to help make your home buying experience smooth and easy so that you can feel at ease.

Ask a Lot of Questions:

Each homebuying experience is unique, and you might have questions, especially if this is your first home. Your Loan officer knows about the market and your personal situation and they can answer any questions you might have. Ask as many questions as you need to remove stress and uncertainty from this process.

You Are Closer to Owning a Home Than You Think:

Buying a home can feel confusing and scary if you don’t have the right information, but don’t assume that you aren’t ready to buy a home yet. Your job, student loans, your age, and other factors may make you feel like you’re not ready to purchase, but wait. With different loan options, your down payment could be smaller than you thought. A loan officer can help you find a program that could work with your situation, taking into account debts and your credit. Reach out to a loan officer at First Colony Mortgage to see if you can start the process of homeownership!