Some people believe that millennials lack the extensive mortgage experience, vast work employment, and financial resources needed to purchase a home. Others simply think that they have little to no interest in owning a home. However, this may not be as true as you would think. For your ease, we share key tips for millennials that can help you ace your first mortgage.
The Demand Institute recently conducted a survey concerning respondents aged 28 to 29 years old about their current living situation, moving intentions, and home preferences. The survey revealed the millennials are very much interested in obtaining a mortgage and buying a home, contrary to the popular notion that they are not interested at all.
However, for the millennial who is about to cross over the threshold of mortgage and take the plunge into homeownership, there are challenges to encounter. In order for you to make the right move, here are some tips for millennials when getting their first mortgage:
Tips for Millennials: Prepare the Paperwork Required for Mortgage
If you’re a first-time home buyer, it’s important that you know that a lot of mortgage paperwork is going to be required. If the typical mortgage process entails a mountain of documentation, what more for first-time buyers who are yet to establish their credentials? This paperwork is essential to get a lender to approve your application for a mortgage. That said, here are some documents you would need to submit:
- Current month’s pay stubs
- W2 from the past year(s)
- Employment contract
- Driver’s license
Furthermore, you will have to go through the process of a financial background check. Thus, prepare for a credit check. This overall complicated process may require that you get a mortgage broker who can help you out in the whole process.
Save for the Down Payment and Other Expenses
Getting a mortgage involves a lot of money. So what better way to come unfazed from the financial battle than to save for the downpayment and other miscellaneous expenses? While some programs allow you to purchase a home with no money down, it is still best to discuss your savings, gift options, and any other concerns with your loan officer. You also need to ensure that you can keep up with the expenses in the long run. That said, it’s best to come up with a financial planning checklist to prioritize certain expenses. There’s nothing to worry about when you have a professional by your side as your loan officer will help you determine the right mortgage for you.
Pay Off Any Student Loans and Other Debts
To kick off your path to homeownership with a clean slate, it is best to pay off your student loan and settle your other personal debts beforehand. This is one way to ensure that you get approved for your first mortgage home. That said, you need to have a key understanding of the debt-to-income ratio. A debt-to-income ratio is exactly what it sounds like: the amount of debt you have compared to the amount of money you make. This is one way to see if you can manage all the debts based on the income you generate on a monthly or yearly basis. This is extremely crucial in your decision to buy a particular home and whether you can go for a luxury home or settle for a more affordable one.
Final Words: Find Affordable Home in a Competitive Market
Another challenge faced by millennials is the rising value of homes and the competitive market out there. Thus, it takes the utmost patience to find the most suitable and affordable home for you. Take time to shop and once you’ve started shopping, don’t give in to the temptation. Find the best home suited for your lifestyle and realistic for your financial means. Your real estate agent will help you out with this and all the rest!