The high affordability offered by the current housing market, along with rising rental costs, has many Generation Y consumers interested in buying their first home. As buying a first home can be a stressful task, here are some tips for young buyers.
Many Americans rack up some debt in their earlier years, as college loans and credit cards leave them with significant monthly payments. One of the best things Gen Y homebuyers can do is pay off some debt before beginning their home search. Doing so can help to improve their credit scores and reports, which can affect the interest rate offered by mortgage lenders. Gen Y homebuyers can also keep their credit schore high by making payments on time and not opening up new lines of credit before applying for a mortgage.
Gen Y homebuyers should be realistic when determining how much house they can afford. Unlike renting, owning a home comes with additional housing expenses including taxes, home insurance and maintenance. Failing to calculate all of these additional expenses can leave new homeowners unable to keep up with their monthly bills. To ensure they are looking within their price range, Gen Y homebuyers should get prequalified or preapproved for a mortgage.
All homeowners should be aware of the different loan types available when buying a home. A first-time homebuyer may benefit most from going through one of the government-backed enterprises, Fannie Mae and Freddie Mac, which have low down payment requirements and varying rates.
Get more insights on mortgage loans and getting pre-qualified from Edina Realty Mortgage.