If you’re a millennial, you’re likely in the middle of making a name for yourself. With it probably comes the drive to acquire your first-ever home.
Millennials have been dominating the home-buying market. When it comes to homes for sale in Boulder, CO or other parts of the country, the younger generation is definitely leading the way. However, too much excitement and lack of preparation can also result in some bad home-buying decisions.
The question now is how should millennials go about the home buying process. Continue reading below for some valuable tips that will guide you toward the right purchase.
Settle your loans and debts
If you’re a millennial and you want to buy a home, one of the first things to do is to pay off your student loans. Around 44 million Americans are in the middle of settling their student loans, with the amounts averaging $38,000.
On top of that, there may be other debts you need to pay off. Before buying a house, work on becoming debt-free.
Know what you can afford
Another important tip is to determine how much you can truly afford. Opting for a property that you like is important. However, don’t buy one that’s way beyond your financial capabilities.
Interestingly, the COVID-19 pandemic has only prompted the Colorado real estate to take off, with median home prices soaring by over 9 percent. Given this, you need to be wise with your choices.
When you start computing the value of homes you can afford, keep your total housing expenses to nothing more than 28% of your gross income. Moreover, your monthly debts shouldn’t go beyond 36% of your gross income. This equation should already include your mortgage, as well as the insurance and taxes.
Save up for a down payment
Next, save up for a down payment. With most millennials opting to get a mortgage instead of paying in cash, you need to work on building a solid amount for your down payment. This will help you pay off your mortgage faster while lowering the interest rate that comes with it.
Aim for a 20% down payment. This will save you from paying the private mortgage insurance (PMI), which is the lender’s protection in case you default on your mortgage.
Work on your credit score
Revisit your credit score and work on improving it. For a conventional loan, the minimum credit score requirement is 620.
To raise your credit score, focus on settling your existing debts. Do the same thing for any financial disputes you may have. Review your credit report. Check for any errors and request to correct them online.
Secure a pre-approval letter
Finally, secure a pre-approval letter from your chosen lender. This is something you can show the home seller to prove that you have the means to pay for the property. The letter will also keep you ahead of other prospective buyers.
If you’re ready to look for homes for sale in Boulder, CA, we at Noel & Martinez team will gladly assist you. Connect with us at 303.774.9400 or send us an email at cmartinez(at)remax(dotted)net. Our extensive experience in Boulder Real Estate can help you find the best home at the right price, faster.
