Home Buying Tips for Millennials

The American dream of owning a home is still alive. Millennials are now buying homes more than ever. Buying a house for the first time can seem like a stressful process. There’s no shame in asking for help, especially when buying your first house. Check out these tips we have for millennial homebuyers looking to make the next step.

Get Pre-Approved

A pre-approval letter is the real deal, a statement from a lender that you qualify for a specific mortgage amount based on an underwriter’s review of all of your financial information such as credit report, pay stubs, bank statement, salary, assets, and obligations. Pre-approval should mean your loan is contingent only on the appraisal of the home you choose, providing that nothing changes in your financial picture before closing. The reliability and simplicity of your offer stand out from other offers. And pre-approval can give you that reliability edge. It’s also important to remember that after you get pre-approved, do not make any other major purchases, such as buying a car. This changes your finances and has an impact on what you were pre-approved for previously. If the car purchase can wait, then put this major purchase off until after you have closed on your home mortgage purchase loan.

Pay Off Small Debt

Chances are if you’re a millennial in your twenties, you have student loan debt. If you have student loan debt, don’t think you can’t get a mortgage. Don’t worry about this debt as much as credit cards, car payments, and any other monthly payments you might have. Just make sure you don’t miss a payment and factor in these monthly payments into your total budget. However, it’s important to remember that with some credit cards, having a zero balance for an extended amount of time can lower your credit score because it does not show usage. Be sure to read the fine print of your credit card agreement to determine if this is the case. Our loan officers at First Ohio Home Finance are here to answer questions you may have about paying off debt and the effect it may have on your credit.      

Set a Budget

Once you’ve paid off some of your smaller debt, it’s time to look at what you can afford, not what you think you can afford. Your monthly mortgage payment (payment, taxes, homeowners insurance) should be less than 25% of your monthly income after taxes.

Start Saving

You will need to start saving as soon as you begin entertaining the idea of buying a house if you don’t save regularly already. You’re going to need to have money set aside for a down payment, possible closing costs, home inspection, surprise expenses and it’s a good idea to build an emergency fund. To figure out how much you need, talk with a loan officer at First Ohio Home Finance to get an idea of your budget and mortgage loan payment.

Don’t Have A Realtor?

First Ohio Home Finance encourages all buyers to utilize a real estate agent. Having a realtor isn’t only for those looking to sell their home. Having a realtor can be a great resource for a first time home buyer. Don’t have one yet? Feel free to ask your loan officer for a referral to match you up with an expert that is familiar with the home market in your area you’re looking to purchase in.

Check Out First Time Homebuyer Programs

The state of Ohio works with mortgage companies, lenders and credit unions to offer home loans to people with low and moderate incomes, including first-time home buyers. The Ohio Housing Finance Agency (OHFA) helps low- and moderate-income borrowers get 30-year, fixed-rate conventional, Federal Housing Administration, Veterans Affairs and U.S. Department of Agriculture Rural Development mortgages with relaxed income and purchase price limits. OHFA also has a number of programs that assist first-time buyers and others buying a home. Benefits include lower mortgage rates, down payment assistance, tax credits and combined financing for buying and renovating a home. Besides basic eligibility rules, each program may have additional requirements.

At First Ohio Home Finance, we’re here to help you with every step of the way during your first mortgage loan process. Reach out to us today to get started!