Home Buying Tips for Millennials

BY The Lenders Network

millennials home buying tips

3 minute read

Millennials are leading all other generations in current home sales.

Through June 2018 Millennials make up36% of all homes sold, up from 32% in 2017.

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1. Monitor Your Credit

As you probably already know, your credit score is one of the biggest factors in determining your eligibility for a home loan.

If you’re not monitoring your credit report there may be errors on it you’re unaware of. There are several credit monitoring services out there.

Our favorite free credit monitoring apps are Credit Karma and Credit Sesame.

If you find any errors on your credit report you can dispute it with the three major credit bureaus. The credit bureau will launch an investigation into the dispute and has 30 days to validate the account, otherwise it must be removed.

2. Don’t Open Any New Accounts

When you apply for a new credit card or loan, a creditor will pull a copy of your credit report and scores to make sure you qualify. This is called a hard credit inquiry and it will reduce your credit rating.

If you’re planning on buying a home in the near future it’s wise to refrain from having your credit pulled. The last thing you want to do is have your credit score dragged down right before applying for a mortgage.

3. Get Pre-Approved before You Start Looking

Before you start looking for homes you want to be pre-approved with a lender. Getting pre-approved is a process where a loan officer checks your credit report and score, verifies your income and assets to make sure you can afford a mortgage and that you meet the basic requirements for a home loan.

The lender will issue you a pre-approval letter that states how much of a loan you’re approved for.

Before you call a mortgage company to get pre-approved there are some documents you need to have.

Documents Needed for a Pre-Approved

  • Last 2 years of tax returns
  • W2’s from all employers
  • Bank statements or statements where your down payment is coming from

4. You Don’t Need 20% Down

Gone are the days of needing to bring a huge 20% down payment to the closing table. There are several types of home loan products that allow you to purchase a house with significantly less money down.

FHA Loans – The Federal Housing Administration was created to help encourage homeownership. FHA loans are one of the most popular types of mortgages used by first-time homebuyers.

If you have at least a 580 credit score you may qualify with just a 3.5% down payment. FHA loans are very popular with Millennials because of the low credit and down payment requirements.

VA Loans – If you have served in the military you may be eligible for a VA loan. A VA home loan is one of the cheapest mortgage options available because they do not require mortgage insurance or a down payment.

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5. Compare Rates with Multiple Lenders

Closing costs are fees charged by lenders for processing and issuing the loan. This fee is usually between 2%-5% of the purchase price. Closing costs will also vary by lender. A loan estimate will provide you with a full breakdown of the terms and fees of the loan.

Anytime you get  loan you should check with multiple lenders to make sure you’re getting a good deal. Rates and fees with vary lender to lender so you should get a loan estimate from at least 3 different lenders.

6. Hire a Knowledgeable Real Estate Agent

A real estate agent will help guide you through the home buying process from start to finish. Some millennials make a mistake of not hiring a realtor, or using the sellers realtor.

Hiring a real estate agent is not something you, as a buyer, will pay out of your own pocket. The realtor fees are paid by the seller and are already figured into the sales price.

In Conclusion…

If you’re a millennial right now is a great time to buy your first home. There are some great types of home loans available that only require a small amount down.

Make sure to check your credit score is up to par and there are no errors on your report and are no mistakes on your report and get pre-approved before you start house hunting.

Do you think you’re ready to buy a home?

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