While there have been many stories in the news lately about millennials not buying homes, you don't have to be part of that trend. Buying a home will help you build equity and a stronger financial future. As a young, first-time home buyer, there are a few things to keep in mind. Here are three tips for millennials buying their first home:
Clean Up Your Credit
If your credit is still suffering from that credit card debt you racked up the first year after college, it's important to spend time cleaning it up before you apply for a mortgage. Paying down debt, transferring balances to a card or personal loan with lower interest, and making sure you have much more credit available than you actually use are all effective ways to boost your credit score. It's also important to keep a careful eye on your credit report and request that inaccurate information be deleted.
Save Up for a Larger Down Payment
The bigger your down payment, the lower your monthly mortgage payment and the sooner you will pay off your loan. A large down payment can also help make up for so-so credit, making you less of a risk for mortgage lenders and landing you a better interest rate.
Be creative when looking for ways to save up for a large down payment. Consider moving in with your parents for a while and setting aside the money you would normally spend on rent. Get a weekend job bartending or waiting tables. Sell old, unwanted items online or by having yard sales. Start a side business as a freelance writer or web designer. Stash all the extra money you make until you have enough for a decent deposit.
Consider Becoming a Landlord
If you are already used to living with roommates, you may want to consider buying a home that is a bit larger than you need and renting out the guest room to a paying tenant. Another option (if you live in a city that allows it) is to set up a guest suite and rent it out as a vacation rental. This allows you the best of both worlds, since you can block off time on the calendar when you would like your own space, but also make extra money to put toward your mortgage whenever you'd like.
By following these tips, you will help ensure a smooth first time home buying process. Once you're ready to begin looking, contact a real estate agent to learn about homes for sale in your area.