Long ago the millennials were considered to be as the generation of the 1950s – 1970s, but today they are known as the baby boomers. The new millennials are the ones born between 1980s and 2000s, they are the ones who have the age range between 25 – 35 years old and like their predecessors before them, they too are eager to own a home or real estate property. The lavish exterior architectural signature of a top notched house and cozy interior design makes just about every millennial drool to live in one and call it their own.
However, most millennials are either jobless, in between jobs or are not earning enough to make a living, let alone acquire a real estate property. So while deferring to buying a property by your own means, here are a few tips that you can do when opting to get a mortgage.
Consider a Low Down Payment Loan
Most people don’t know that there actually low cost mortgage down payments for housing loans and so they miss the opportunity to opt this kind of mortgage in owning a home. There are low down payment FHA loans that you can avail for as low as 5% of the total price of the property, there are even mortgage loans at 3% down payment! Military servicepersons and others who can qualify for a VA loan, guaranteed by the U.S. Department of Veterans Affairs, can buy a home with no down payment. You’d be surprise that your income can actually qualify you for a low cost housing loan.
Expect to Document Your Income
Banks, financial institutions and other lenders offer mortgage loans with some empathy to borrowers; however, they will require proof of income from you. That’s because they need to know that you can uphold your promise of the bargain from your end, otherwise they will have to foreclose, lose money and suffer losses on reselling the property you initially acquired. That’s bad for business, moreover, your credit score will also get affected, so be ready to present W-2s, bank statements, income tax returns and other income-related documents.
Check Your Credit
As a millennial you may not have that much of a credit score record, especially now there are tens of millions that are unemployed and the millennials make up a huge chunk of those figures. But even if you have not much to show for it, do try to make your credit score presentable enough so you can get the loan. A good credit score is one of the most important qualifying categories in borrowing money from banks for purchasing a real estate property.
Manage Your Student Loan Payments
Unpaid or huge student loans can be a road block in your pursuit of getting a mortgage loan from a financial institution. Banks uses what’s called a “debt-to-income ratio” (DTI) calculator in order to determine whether or not you’re eligible for the loan. The DTI is, well, exactly as the description says and it will measure your income versus the debt obligations you have. The ratio has to be in your favor, otherwise you will not qualify. If you want to get that loan, then you shouldd start paaying off your unpaid student loans and pay them regularly, so you’ll have a better odds.
Save for Closing Costs
You can also pay the home buying or closing costs such as the credit check, home inspection, homeowner insurance, prepaid interest and mortgage insurance upfront. Most sellers are actually open to this option and you can negotiate the amount with them. While this will slightly increase the interest rate, it will, however, shorten the amount of time for you to pay for the mortgage loan and own the real estate property sooner than you would expect. And since you’ve already paid a significant amount as an initial deposit for the price of the house, your monthly payment obligations should be reduced.