While buying a home as a twenty-something may seem like an impossible feat, the truth is that it doesn’t have to be. Even if you can’t afford your dream home yet, finding an affordable home and financing it affordably it is possible. If you’re hoping to transition from renting to owning without going broke, the following guide is for you.
Improve Your Credit
Prioritizing your credit is an important part of preparing for homeownership. As many twenty-somethings have lower credit, applying for a mortgage can be challenging. If your credit is lower than average, now is the time to improve it.
Start growing your credit by reviewing your credit report and working to keep your credit card balances below or at 30% of the credit limit. If you have no credit at all, open up a few credit cards, making sure to pay them off every month.
Get Pre-Approved for Your Mortgage
Getting pre-approved for your mortgage is the next step in affording your new home. Pre-approval helps you create a budget for house hunting. Getting pre-qualified with a lender or your bank will allow you to calculate a monthly payment based on interest rates and your down payment.
Save as Much as Possible
Many a real estate agent believes that when it comes to buying a home, the larger the down payment the better. While the amount of time you have to save for your down payment will depend on your house buying timeline, experts recommend that first-time homebuyers save for a minimum of six—12 months before searching for a house. Getting into the practice of setting aside a portion for your paycheck to cover the down payment on your home will give you great flexibility when it comes time to get a mortgage and to cover closing costs.
Choose an Affordable Home
Just as qualifying for a mortgage and saving money are important steps in moving towards homeownership, so is choosing an affordable home. If your monthly mortgage payments don’t already fit into your budget, you’ll quickly find yourself in financial trouble after buying your first home. By purchasing a home within your budget, you’ll be able to live comfortably as you get accustomed to your life as a homeowner.
Homeownership may not be that far off from your future. If you’re ready to make the leap into owning, be sure to keep this guide in mind as you prepare to buy your first home.
Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most of her time hiking, biking, and gardening. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan