A Millennials Guide To Buying A Home

Dated: 08/01/2017

Views: 1195

Image title

That moment when you just can’t stand writing one more check to your landlord so that he can pay his mortgage payment. That is the moment you are emotionally ready to buy your own home, at least according to investment experts.

We’d like to extend that list of moments to include the longing to get the kids a dog, drooling over the weird paint color you’d love to use to adorn the bedroom walls and the green thumb, itching to dig in its own backyard.

Now starts the sometimes-long road to home ownership that millennials just like you have traveled. Yup, others have paved the way for you, so if you follow their example, at least the examples of those who’ve been successful, you’ll soon be picking up dog poop in your very own backyard.

Cold Hard Cash

Houses cost money. Big money. At least initially. And, according to a recent apartmentlist.com survey, of the 80 percent of millennials who want to buy a home, only 68 percent of them have managed to save less than $1,000 and a sad 44 percent of that group have nothing saved.

“Based on their current rate of monthly savings, our survey found that millennials in many of the nation’s large metros will need at least a decade to save enough money for a 20 percent down payment on a condo,” claim the site’s Andrew Woo and Chris Salviati.

They go on to say that millennials in the pricier large metros, such as San Francisco, San Diego and San Jose have a waiting time of “almost 24 years.” Buyers armed with a 10 percent down payment can shorten the wait to five years or less, according to the study.

Which means that those who choose an FHA-backed loan, a Fannie or Freddie or USDA loan, with an even lower down payment requirement, are sitting pretty. Then, there are the many local, regional, state and national down payment assistance programs. See? Every cloud has its silver lining.

The moral of the story is to start saving now. Yes, you have student loan debt and, yes, you need to pay rent and all of the other typical life expenses. But paying yourself first should be your priority if you want to buy a home.

Your debt

The word “millennial” is so often followed by “student loan debt,” in the media one would think it’s the generation’s middle name. While it’s true that this debt is at an all-time high, and some millennials are on the hook to repay up to $53,000, it’s not the impediment to home ownership that some make it out to be.

The simplistic will advise you to boost your income and eliminate your debt when considering purchasing a home. While sage advice, it’s unrealistic to tell someone who longs to purchase a home to wait the aforementioned 24 years.

And, there is relief for many with two recent announcements by Fannie Mae.

Currently, lenders look at a borrower’s debt-to-income ratio (how much you owe vs. how much you earn, known as DTI) and require that it be no higher than 36 percent. After July 29 of this year, however, that ratio can be as high as 50 percent, under certain conditions.

Then, in April, Fannie Mae announced a new policy specifically aimed at millennial homebuyers who have student loan debt. Basically, it excludes any debt that isn’t mortgage-related (auto loans, credit cards and, yes, student loans) from the borrower’s DTI, as long as these debts are paid by someone else (such as a parent).

Curious about your debt-to-income ratio? Use the online calculator at nerdwallet.com.

If your DTI is still too high, despite the new solutions from Fannie Mae, get busy increasing your income and decreasing your debt. The College Investor offers a brilliant list of 10 “Easy” Ways to Earn $100 per Month and also see 8 Ways to Eliminate your Student Loan Debt.

Credit history

So, what if it’s not necessarily student loan debt but a lousy credit history standing between you and homeownership? There’s good news on that front as well.

The so-called “Big Three”credit reporting agencies, Experian, Equifax and TransUnion recently announced that most tax liens and civil judgments will no longer end up on credit reports, provided the information in the creditors’ report isn’t complete.

“Specifically, the data [submitted to the credit reporting agency] must include the person’s name, address, and either date of birth or Social Security number,” according to Diana Olick at cnbc.com.

Apparently, errors like this are common, impacting a large number of loan applicants. “With these hits to their credit removed, their scores could go up by as much as 20 points,” Olick claims.

Even if you don’t have judgments or liens on your credit record, it’s always a good idea to order all three reports and pore over them for other mistakes. The Federal Trade Commission claims that about 20 percent of American consumers have a mistake on their reports. Ridding your report of errors is one of the easiest ways to increase your credit score.

In fact, the FTC study found that “ . . . about 20 percent of consumers who identified errors on one of their three major credit reports experienced an increase in their credit score that resulted in a decrease in their credit risk tier . . .”

The FTC offers advice on not only how to get free copies of your credit reports but how to dispute erroneous information as well.

If you truly want to buy a home, stop listening to the naysayers in the media. The millennial generation currently makes up the largest group of first-time home buyers, so obviously, not all is the gloom and doom they say it is. Especially with the new programs and relaxed requirements, buying a home is easier than you think.

Do you want a competitive edge when buying or selling a home in your market? How would you like a home sale guarantee on your listing? Do you like to find deals on homes that no one else knows about? Would you like to get free video tours of homes as soon as they hit the market? These are just a few of the benefits you get when you work with me to buy or sell a home! Be sure to visit my Facebook page@NWAtlantaHomesAndLifestyle right now tofind the best buyer and seller information and to see sample video tours of the hottest deals in Cobb, Cherokee, Bartow, Paulding, and N. Fulton  County!!

Latest Blog Posts

A Few Of My Favorite Things In Grant Park

    Sometime while bartending my way through college (Winthrop Eagles in the house!) I discovered craft beer. I used to dream of one day working for a craft brewery. Well, I

Read More

Upgrade Your Bathroom On A Shoestring

Kitchens and bathrooms are the workhorses of the house. Every member of the family spends time in each room, numerous times a day and, over the years, both can become worn and drab. Sure, they

Read More

What You Need To Know Before Selling Your Home

Are you ready to put your property on the market?You might want to double check this list first!When you decide you’re ready to sell your home, you will have to dedicate some time and effort to

Read More


Painting is one of the most inexpensive ways to give your home a makeover. Whether it’s updating an old bathroom paint scheme or adding a bold accent wall, paint can totally transform a room. But

Read More