Millenials are now reaching their mid-twenties and many are taking the plunge and buying their first homes. It makes a lot of financial sense—if you can afford it. Not only are you building equity, rather than throwing away money on rent, but you’re also able to customize a home to your own standards, rather than having to abide by landlord rules. Taking that step to become a homeowner isn’t easy, however, which is why US News correspondent Erin Lowry shared some suggestions on best practices for how to go about the home buying process.
Look into first-time homeowner programs
Certain areas will provide assistance to first-time homeowners who commit to live in the area for a certain amount of time. For instance, Lowry interviewed Atlanta resident Lauren Bowling who was able to take advantage of a payment assistance loan, which means part of her loan would be forgiven after the required amount of time had passed. There are often rules that go with this type of program governing what type of home you can buy. Bowling said, “I had to buy a foreclosure, but I picked an older, foreclosed home that needed new plumbing, electric, the works.” This left her with a lot of remodeling work to do, but she was able to get the home at a cheaper price.
Get out of debt first
Before immersing yourself in a mortgage, it’s a good idea to pay off other loans or at least have a good handle on them. Erica Schoch wanted to buy a home by her mid-20s and actually managed to graduate college without student loans, but she did have a car payment to make. Before buying a home, she made it a goal to pay off her car, a goal she was able to meet by working night shifts at the hospital for $3 per hour more than her usual pay.
Make smart budgeting decisions It’s best to have a significant amount of money put away for a down payment on a home. A down payment of 20% would allow you to avoid paying mortgage insurance and drastically cut down on your monthly payments. When this isn’t possible, other sacrifices can be made. Lowry interviewed another young couple, Allison and Josh Hines, who opted to go for several weekend-long, mini honeymoons rather than one long, expensive one in order to save up more money for a down payment on a house.
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