Are you a millennial who wants to invest in your first home? It might seem daunting, but it’s actually a lot more achievable than you might think. Here are some need-to-know tips to get you started on investing for your first home!
In the present era, more and more millennials are making this big decision. According to a recent study performed by CNN (1), Millennials are now the largest group of homebuyers.
Given these demographic changes, many millennials are now starting plans to purchase new homes of their own, In this article, we’ve listed some tips that will help millennial homebuyers succeed as soon as possible.
As a new home buyer, be sure to add these simple tips to your list:
Buying a home can be daunting for first-timers. There are many requirements, costs, tasks, and steps that can make you anxious or lead you to make an expensive mistake. Thankfully, millennials who want to buy homes can consider national and local First Home Buyer Programs.
Buying a home is an essential part of the American dream. That is why first-time homebuyers can get help from federally backed loans, tax breaks and state programs. Some First Home Buyer Programs include:
FHA loans are insured by the Federal Housing Administration. They are best for those with low credit and smaller down payments. First-time homebuyers can buy a home with a minimum credit score of 580 and as little as 3.5 percent down or a credit score of 500 to 579 with at least 10 percent down. (4)
With FHA loans your overall borrowing costs can be higher since you’re paying an upfront premium and annual premiums. The upfront protects the lender’s stake in the loan if you default.
USDA loans are 100 percent guaranteed by the U.S. Department of Agriculture. As a first-time homebuyer with lower or moderate-income, this loan might be useful for you.
This financial guarantee comes with the rule that you do have to buy a home in a USDA-eligible area. You need to have a credit score of 640 or higher to qualify for a USDA loan.
This particular loan is backed by the U.S. Department of Veterans Affairs that allows no down payment for military personnel, veterans and their families. Luckily, if you are an active-duty military member, veteran or spouse of a military member this type of loan can benefit you a lot.
VA loans come with lower interest rates compared to most other loan types. It also doesn’t require a down payment. There are no minimum credit scores or mortgage insurance requirements.
As a millennial, you may find it hard to make such a big purchase. Maybe something with less upfront money is of more interest to you, such as a Rent-to-Own home.
Rent-to-own contracts are an alternative to traditional home loans. The renter has rights to purchase the home at a specific time in the future. A portion of the money paid upfront and as part of the established monthly rent also goes toward the purchase price.
Companies like Home Partners(2) are closer to real estate investment firms. They work with you and licensed agents to find a single-family home you may not typically be able to rent. They set a purchase for the home and lease it to you. You have the right to buy the home after your lease is up at the pre-set price. Divvy Homes is the other well known rent-to-own and a new kind of real estate company in the USA. (3)
Getting a house is not an easy task that can be done overnight. You need lots of planning and research to find the best option. Do not jump into a single option without first exploring others. Pay visits to different real estate agents. They can help you make the best decision.
Do your research before applying for a particular loan type. Make your budget and find a house that best suits you. Good luck!
Source: Buzzy Usa