4 Tips for Millennials When Buying a First Home

Low mortgage interest rates and property prices are empowering millennial to buy rather than rent. As a matter of fact, recent surveys show that one in four couples aged 18-34 are signing a deed together even before getting married. As young first-time homebuyers are a crucial part of the housing market, we feel it's important to provide tips for millennials to help them buy that first home!

1. Assess Your Financial Situation

Lending institutions typically follow the 28/36 rule. This means that your mortgage payment, property taxes and insurance should not exceed more than 28% of your monthly gross income. Add to that your total debt payments, including college loans and credit card debt, which should not total more than 36% of your gross income. Lenders also look at your credit score to ensure that you’re in stable financial condition to take on the responsibilities of a mortgage.

2. Start Saving for a Down Payment

Homebuyers typically put down anywhere from 3-20% of the total mortgage cost. The more you’re able to put down upfront, the less your total loan amount will be. Increasing your down payment will also make you eligible for loans at lower interest rates. Furthermore, when you put more money down at signing, mortgage lenders will provide you with more wiggle room as far as how much you can borrow. While there are lending options available to qualified borrowers that will cover 100% financing, there are typically higher interest rates and/or PMI involved due to the increased risk for the lender.

3. Before You Start Looking, Get Pre-Qualified
Getting pre-qualified before you begin looking for your dream home can save you a lot of time in your search. Not only will it provide you with a better idea of what you can afford, but it can be a great tool to have for buying leverage when you do find your dream home. The seller won't need to wonder if their time is being wasted by entertaining your offer or whether you'll actually be able to qualify for a big enough mortgage loan, meaning your offer will hold more weight and value. 

4. Have All Documentation Together
When applying for a mortgage loan, there are several items that you'll need to provide to the lender so they can begin processing your application. All too often, buyers run into snags in the approval process because they were unaware of a document they needed to provide to the lender. This can hold up the approval process and potentially put the buyer at risk for not meeting necessary contract deadlines on financing. Check with the lender you plan to work with in advance to obtain a list of documents that may be required for the loan application process to ensure you're providing all necessary paperwork to avoid delays.

With these tips, we feel that millennials will be more comfortable making the decision to buy for the first time. So, if you're in need of a mortgage for a new home or have any other questions pertaining to mortgage lending, trust in the mortgage professionals at MHQ - Mortgage HeadQuarters to have your best interest in mind.  We can help you choose a mortgage program that's right for you and your specific needs! 

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4824 Osage Beach Parkway, Suite 1
Osage Beach, MO 65065

Office: (573) 302-9990
Toll Free: (888)799-1206
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