The National Association of Realtors’ latest statistics show that Millennials (people born between 1981 and 1996) have bought more homes in the last few years than Baby Boomers and Gen-Xers. A whole lot of them are grabbing onto the American dream of homeownership. They now make up the largest group of home-buyers.
According to a survey from Bank of America, 63% of millennials say that buying a home is one of their primary financial goals.
With low mortgage interest rates, there probably isn’t a better time, despite the steep competition for properties these days.
Are you a Millennial looking to buy your first home? Or maybe you are still trying to make it all the way into homeownership? Here are some practical steps that can be taken to make the process easier for Millennials in Boston, especially first time buyers.
Home Buying Guide Tip 1: Calculate Carefully
You must make absolutely sure that you are financially ready to buy a home and can actually afford it. Your lender will want to make sure of that too.
Most lenders use what they call the 28/36 rule, and it can be a good guide for you as well. This rule states that your monthly mortgage payment with insurance and property taxes figured in should not be more than 28% of your net monthly gross income.
In addition, all your other monthly debt payments – for example, student loan, car payment, credit cards, and so on – added to the mortgage/taxes/insurance payment should not total more than 36% of your gross income. Otherwise, even if you can get a loan, you probably can’t afford the house – and may end up facing some financial trouble down the line if some unexpected circumstances, such as a job loss or global pandemic, arise.
Home Buying Guide Tip 2: Have a Good Down Payment
Since the housing bubble, lenders are far less willing to offer 100% financing.
And the size of the down payment will determine, in large part, the term of the mortgage and the monthly rate. Down payments typically range from 3% to 20%. The more you put down, the less you’ll have to borrow and the less you’ll pay in interest.
Also, the higher your down payment, the stronger your offer to purchase real estate will be.
Paying more down will not only make you eligible for lower interest rates but can also help you borrow more if you want more house. If, however, maximum financing is the only way you can swing it, then look into an FHA loan. Just be aware that with an FHA loan you will pay a significant amount of money for private mortgage insurance.
Home Buying Guide Tip 3: Figure In All of The Costs and Expenses
When you’re doing the math, make sure you figure in all the costs and expenses. Many people, when trying to determine whether they can afford to buy, often overlook things like closing costs, homeowner’s insurance, and property taxes.
And then there will be the inevitable costs for maintenance and repairs and the renovations at some point. There are a lot of costs that go into buying a home, and the expenses can really add up.
These are all part of the cost of purchasing and owning a home.
Home Buying Guide Tip 4: Get Competitive
Over the past few years, sellers have been in short supply, so home prices have risen and competition among buyers is fierce. So you, too, will have to get competitive, especially if you happen to be in a hot housing market. You can get a competitive edge by:
- Getting pre-approved for a mortgage loan
- Acting decisively to keep the transaction process moving
- Being courteous with the homeowner
- Putting the most down that you can afford
- Waiving contingencies (but be careful – make sure you speak with us first and understand the risks when you’re forgoing things like an inspection or mortgage contingency)
Final Home Buying Guide Tip: Get Organized and Use an Agent
This last step in our home buying guide for Millennials in Boston may just be the most important. And that is to get and stay organized primarily by having all the necessary documents in order – documents like your ID, credit report, pre-approval letter, employment verification, proof of income, bank statements, and tax returns.
This will make everything smoother for you and your real estate agent.
And that’s the other part: be sure to use a qualified local agent to help you navigate the whole complicated process. Our agents at NextHome Titletown Real Estate have the knowledge and experience to do just that.
So contact us today to learn more about the tips found in our home buying guide! (617) 657-9811
Boston and Beyond – Just Hit the Market!
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