What You Should Think About If You’re a Millenial Buying Your First Home
While much of the world perceives millennials (also known as, “Generation Y” or “Gen Y”) to be fun seeking, tech-savvy, and an experimental bunch; many of you are starting to settle down and giving more serious thought about the future. As the older members of Gen Y are entering into your thirties, it’s only natural that many of you are shopping for a first home for your young families. According to the National Association of Realtors, in 2015, 30% of home-buyers were millennials with the median age being 30 years old. In a world where millennials are used to receiving instant gratification, buying a home is in no way a “quick-buy”. So a friendly word of advice to all you millennials reading this, you must take your time and seriously consider whether or not you’re financially fit for such a purchase.
Think about loan programs you can take advantage of as a first time home buyer.
With so many millennials up to their necks in student loan debt, it can be hard to even fathom being able to afford a home, let alone qualify for an FHA loan. If you’re one of the many millennials questioning whether you can afford a home in this day and age, then you will be pleasantly pleased to know that you may qualify for an FHA First Time Home-Buyer’s Loan. If you’re not familiar with the home buying process, here’s a bit of clarification: in order to buy a home, the buyers have to be prepared to provide a down payment. The exact amount of the down payment can vary, but more often than not, it ends up being 20% of the home’s selling price. When applying for an FHA loan (first time buyer or not), it’s very important that the potential buyer is in tune with his or her current financial standing. Lenders look at a buyers’ paper trail; in other words, the buyers’ credit score, current income, and on-going monthly bills. While an FHA First Time Buyer’s Loan may make it possible to put less than 20% down on a house, it may not always be the smartest choice financially; the lower the down payment, the higher the mortgage rate can be– not to mentioned you would also have to pay for a private mortgage insurance (PMI). While some of you millennials would be able to budget for such a mortgage, it may prove to be too overwhelming for others.
Think about affordable locations you can buy a home in.
Typically, urban areas are known to house the more socially outgoing and younger generations as it offers an active nightlife and faster paced lifestyle. Yet, as metropolitan areas become more and more expensive to live in, if you’re a millennial trying to search for a home, you’ll find that the only way to afford to buy a home is away from the city and into suburban neighborhoods. At first, this may not seem ideal to you, but you’ll find that it is probably the financially smart move– especially with gas prices being lower, commuting to the city is a lot more affordable than it has been in the past. Moreover, as more and more millennials search for homes to buy and filling up suburban neighborhoods, more independent shops, cafes, and other small businesses are popping up too. So if you’re in the market to buy a house, don’t let the expensive home prices in the city stop you from finding your perfect home. Do check in suburban areas that are on the rise, because you may just find everything that you’re looking for.
Are you a millennial looking to buy a home for the first time? Tell us about it in a comment below.