If you’re a millennial looking to buy a house for the first time, you may be thinking the process is a little overwhelming. You probably want to know how to figure out if you can afford a home and if owning a home is really more affordable than renting.
The millennial path to homeownership looks different than that of other generations, but it’s still rewarding. With rent prices rising, maybe it is time to consider owning a home that is truly yours.
So, how does a millennial survive the home buying journey and its emotional ups and downs? We’ve come up with these first-time home buyer tips to help the largest generation take back their freedom and own a home.
Grab a drink and stay calm as you begin on one of the biggest journeys U.S. millennials take!
1. Create a Budget
Before you start your home buying journey, create a budget for your new home purchase to help you estimate how much of a monthly mortgage payment you may be able to afford as part of your budget.
You can estimate what you can potentially afford by taking your monthly income and subtracting the costs of all your expenses such as utilities, food, travel expenses, personal expenses such as entertainment and clothes, medical expenses and other items.
2. Build Good Credit
Since millennials are around 18-34 years old right now, if you’re a millennial, you haven’t had a lot of time to build credit. However, there are still plenty of first-time home buyer credit tips that may help you build your credit for home financing opportunities.
You can build your credit by:
- Paying your bills on time
- Getting a secured credit card
- Asking your landlord to report your timely rent payments to certain credit reporting agencies
- Increasing your credit limit but not how much you spend
These are simple ways you can begin building your credit if you don’t know where to start.
3. Decide What Features You Need or Want
Before you start looking for houses, think of features you want and need in your new home. Create a list and divide amenities up by wants and needs so that you know what is necessary and what is the icing on the cake.
Consider these questions when asking yourself what your home should have:
- How many bedrooms and bathrooms do you need based on the number of people that will be living in your home?
- Do you have a spouse or roommate with whom you will be sharing the master bedroom and bathroom? Will it be helpful to have a double sink vanity?
- Do you want a garage for parking your car?
- Are you looking for energy efficient features to help save money on your utility bills?
- Do you have any dogs or cats and would you like built-in pet features for them?
4. Consider More Affordable Home Options
You may have heard more about manufactured and modular housing lately, and that’s a good thing. Prefabricated homes are generally more affordable than new single family site built homes. They even have a more efficient building process and customizable options, such as pet-friendly features.
After you make your list of wants and needs for your home, you can use it to have a home built new, just for you and exactly the way you want it. There are plenty of reasons why prefabricated homes are great for millennial home buyers.
5. Research Homes Online First
Use home finding apps and websites to look for homes in the area where you wish to live and compare amenities, features and pricing.
If you’re considering manufactured or modular housing, you can even use the Clayton Home Previewer® App to see what different homes will look like on your land.
6. Talk to an Expert
After you have done your homework and research, consider meeting with a real estate agent if you decide to go the site built route, or call your local home center to meet with a knowledgeable home consultant at a manufactured home center. Either way, someone who knows the housing industry well can help you find the perfect fit for you.
7. Go on a Home Walk-Through
Whether you want to go to an open house or schedule a private tour, you will want to see your home options in person before making any decisions.
Start by picking a few homes that interest you. If you choose to go to a local home center, you will have the opportunity to tailor your home center visit to your desire.
You can tour multiple homes in one place by yourself or even take walk-throughs of model homes with a home consultant so that they can answer any questions you may have.
8. Get Financed with a Trustworthy Lender
Once you have a home in mind, you will want to research lenders to work with in order to apply for financing for your home purchase.
- Check reviews online for different lenders.
- Talk to friends and family for advice.
- Call a few lenders to get a feel for their process.
- Ask multiple lenders what mortgage options for first time home buyers they have.
- Before you try to get approved for a home loan, make sure to ask the lender what information you will need to provide them as well as other steps to take before receiving home financing.
9. Be Patient
Whether you decide to purchase a manufactured or modular home or you decide to start hunting for existing homes for sale, the market can be rough. The home you want might suddenly get sold, have unknown repair needs or the new home building process could take a little longer than you expect.
No matter what, be patient and flexible as you look for your dream home. Once you do find the home of your dreams and obtain financing approval, you can purchase your home and finally live rent free!
Remember, becoming a homeowner at a young age may seem scary, but it is definitely rewarding. You’ll be happy to have a place to call your own where you make the rules.