A Millennial's Guide to Your First Mortgage

Published on May 17th, 2016

Are you ready to buy your first home? You might be thinking, “Yes! No more landlord, no more parents, no more wasted rent payments!” And it’s true buying a house gives you the freedom to do whatever you want there. It’s also a great investment that you can sell again for a pretty penny.

But let’s be honest, buying your first home is terrifying. For those making this commitment for the first time, terror may be an understatement. There are a few questions you need to ask yourself to decide if you’re truly ready.

Once you decide if the benefits outweigh the risks, use our multi-step rate quote calculator to breakdown your monthly payments.

Are you ready to settle down somewhere?

This is probably the most daunting and difficult question to ask yourself – and there are several other questions that come along with this. Are you ready to make the move somewhere and stick there? Do you have a stable job? Do you have family living nearby? Is your significant other on the same page? How long do you plan to stay here? Is this my ideal neighborhood? All these questions and more require some serious thought. So sit down, grab a cup of coffee (or a strong cocktail), and write down your thoughts. If you have any doubts, talk to a trusted friend or relative who has been through the home-buying process. Think you’re ready? Chat with one of our mortgage advisors and let’s get this show on the road!

Can I actually afford this?

Healthy finances are the key to even qualify for a loan. The best place to start is to talk to an experienced mortgage advisor and go through the home pre-qualification process. Once the pre-qualification process is finished, it’s best to sit down and set up a budget since you may be approved for more than you can actually afford in your month-to-month mortgage payment. Open up an excel sheet and add up your monthly bills. Do you have money leftover for savings and entertainment? Do you have an emergency fund? A good rule of thumb is to have 6 months of bills saved up when you purchase your home. It’s also important to have enough money saved for a down payment. Down payments can vary based upon your loan program, so talk with your mortgage advisor about the recommended amount. Use our multi-step rate quote calculator to get a breakdown of your estimated monthly payment.

Can I get a loan?

Qualifying for a home loan completely depends on your financial history. This step is best executed under the leadership of a mortgage professional who has a firm understanding of your finances, credit history, and any other factors that can affect the loan decision. You can face a few challenges qualifying for a home loan if you have bad credit, student loans, or no down payment. But, not all hope is lost! The world is changing and more and more people are working for themselves and are making money in unprecedented ways. The best advice to following is to spend quality time (at least 2 years) doing the following:

  1. Lower your debt: Eliminating it all together is best, but consolidating can lower your monthly payments.
  2. Build your credit score: Know what it is and improve it!
  3. Save: Save for a down payment and have an emergency fund on hand.

Does this house meet all of my needs?

Think long- and short-term. Is there enough space for all of your furniture and sweet knickknacks? Are you going to start a family in this home? Are you going to fix up the house and re-sell it? Are you moving into an area with a lot of rentals? Maybe you could be someone’s next landlord. Write down a clear list of must-haves. It’s okay to be picky. This will help you set aside any emotions and keep your eye on the essentials you need to be happy.

Does this loan work for me?

Congrats! You’ve made a decision on your first home and have reached the contract stage. Now time to read the fine print before signing. After all, this is the first big purchase you have ever made, so make sure you’re not signing on for a financial nightmare. If there is anything you don’t understand in the contract or if you need clarification, don’t hesitate to ask your mortgage advisor or real estate agent for guidance before adding your signature.

Buying a house is big decision so make sure you understand all the steps involved. Reach out to a mortgage advisor today if you have any questions or if you’re ready to get started!

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