Not long ago, many people thought Millennials would never wind up buying homes. That, however, has changed. Millennials have bought more homes in the last few years than Baby Boomers and Gen-Xers. A whole lot of them are grabbing onto the American dream of homeownership. And with low mortgage interest rates and relatively low property prices, there probably isn’t a better time. Still, Millennials face certain challenges for home buying. But if you’re a Millennial and you’re ready to buy, here’s our home buying guide for Millennials in Lufkin.
Home Buying Guide Tip 1: Calculate Carefully
We’d be remiss if we didn’t start off our home buying guide for millennials in Lufkin with an exhortation to do the math and calculate carefully. You must make absolutely sure that you are financially ready to buy a home and can actually afford it. Your lender will want to make sure of that too.
Most lenders use what they call the 28/36 rule, and it can be a good guide for you as well. This rule states that your monthly mortgage payment with insurance and property taxes figured in should not be more than 28% of your net monthly gross income. In addition, all your other monthly debt payments – for example, student loan, car payment, credit cards, and so on – added to the mortgage/taxes/insurance payment should not total more than 36% of your gross income. Otherwise, even if you can get a loan, you probably can’t afford the house – and may end up facing foreclosure at some point if you have a financial crisis.
Home Buying Guide Tip 2: Have a Good Down Payment
Also, if a home buying guide is to be of any value it should advise you to have saved up a good down payment. Since the housing bubble, lenders are far less willing to offer 100% financing. And the size of the down payment will determine in large part the term of the mortgage and the monthly rate. Down payments typically range from 3% to 20%. The more you pay down, the less you’ll have to borrow and the less you’ll pay in interest.
Paying more down will not only make you eligible for lower interest rates but can also help you borrow more if you want more house. If, however, 100% financing is the only way you can swing it, then look into an FHA loan. Just be aware that with an FHA loan you will pay a significant amount of money for private mortgage insurance.
HOME Buying Guide Tip 3: Figure In All of The Costs and Expenses
When you’re doing the math, as we advised above, make sure you figure in all the costs and expenses. Many people, when trying to determine whether they can afford to buy, often overlook things like closing costs, homeowner’s insurance, and property taxes. And then there will be the inevitable costs for maintenance and repairs and the renovations at some point. These are all part of the cost of purchasing and owning a home.
Home Buying Guide Tip 4: Get Competitive
Over the past few years, sellers have been in short supply, so home prices have risen and competition among buyers is pretty keen. So you, too, will have to get competitive, especially if you happen to be in a hot housing market. You can get a competitive edge by:
- Getting pre-approved for a mortgage loan
- Acting decisively to keep the transaction process moving
- Being courteous with the homeowner
Final Home Buying Guide Tip: Get Organized and Use an Agent
This last step in our home buying guide for Millennials in Lufkin may just be the most important. And that is, first, to get and stay organized primarily by having all the necessary documents in order – documents like ID, credit report, pre-approval letter, employment verification, proof of income, bank statements, and tax returns. This will make everything smoother for you and your real estate agent. And that’s the other part: be sure to use a qualified local agent to help you navigate the whole complicated process. Our agents have the knowledge and experience to do just that.