Potential home buyers who were born between 1981 and 1996 are going to some difficult times in paying for their first house. They are more expected than earlier generations to front the closing expenses and down payment by using some of their retirement savings, set aside cash by moving in with their relatives or selling their own personal items.
People of this generation need to be extremely creative and think of the tactics need to figure out how to pay for their closing expenses and what they need to put down. Millennials are exhausting all of their options and need to work harder than the generations before them.
There are people in the finance industry that recommend saving up for retiring than saving up for a home. However, other financial experts say that is okay for millennials to save up for a home for right now, so long as they redirect the savings for retiring after meeting their home savings goal.
People who are between the ages of twenty-four and twenty-eight typically want to use their money that they saved for retirement to pay for a down payment. This generation will most likely make up for this as they get older. The older a person gets, the most likely he or she will be less dependent on parents and relatives.
Here are some tips on how to be responsible and save money for the down payment of your home:
Try very hard not to use your savings for retiring to buy your first home. This is the last thing you should ever use. A retirement find is something you will need to think about saving when you get older.
You should find out the price range of homes that you can afford to buy. You should use the mortgage calculator to see what you are able afford early and jump start yourself to getting more conservative with your spending.
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Make sure you are focusing on what your monthly payment will look like for that mortgage, versus the overall amount of the loan. You might qualify for a three hundred thousand dollar mortgage, but your personal budget might not be able to handle the monthly payment that comes with that once you take into account all these personal expenses that do not get included on your credit report.
Watch your debt to income ratio and credit report and score in detail to find out the types of home loan programs that you are able to use. It is better to look into this as early as you can so that you can have some time to get your credit score back up again.
You should make a savings account that you don’t touch and that is separate from your checking account and emergency money. Home buying only involves saving up as much money as you can for your down payment. You should build out a long term plan and save money early and often. Millennials tend to need three years to save up cash for the down payment and closing costs a bit longer than Generation Xers and baby boomers.
You need to change your mentally if you think that it is okay to not save and live paycheck to paycheck. Your living situation won’t improve unless you start implement good saving and spending habits. You would follow the at least twenty percent of your income should be allocated towards investments and savings. Each dollar that you save up now will be worth more in the future.
Do you have a question about buying your first home? Click here to contact the Ryan Grant Team today!
Courtesy of Cuselleration
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