While there have been a lot of headlines lately about millennials avoiding home ownership, there are still plenty of younger adults who hope to buy a home soon. Buying a home means putting the money you spend on rent toward your own mortgage, building equity, and protecting your financial future. Buying a home for the first time as a millennial does come with a few considerations, however. Here are three tips for millennials looking to buy their first home:
Set a Strict Budget
Your budget should include a mortgage payment you can afford, as well as home owner's insurance, annual property taxes, and wiggle room for home repairs. If you have a high income and good credit, you may be approved for a mortgage that is much higher than you actually need and over your budget.
Don't give in to the temptation of taking out a loan on a huge house or a luxury condo just because you can. Staying in your pre-set budget is the best way to ensure buying a home is a wise choice instead of one you'll regret.
Be Creative About Your Down Payment
Even if you can afford a mortgage payment, you may not have enough savings for a large down payment. This is where it pays to be creative. Some millennials ask for contributions toward their down payment in lieu of wedding registry or college graduation gifts. Others bartend on the weekend or start a freelance business on the side, and put all of the extra cash toward the down payment. Another option is to see if you qualify for any programs with low down payments, such as an FHA loan.
Get Help with Your Mortgage
Even if you can afford the mortgage on your own, you may want to get a roommate to cover half the cost in order to allow you to live frugally and save more each month. As a homeowner, you can ask for references and a credit check to ensure you only have trustworthy tenants.
Another idea is to rent out a guest room, converted mother-in-law unit, or finished basement as a vacation rental. This can be especially lucrative if you live in a popular tourist destination, and you can always block off your calendar of availability when you want your space to yourself.
As long as you make wise choices, are financially prepared, and plan ahead, there is no reason you can't buy a home if you really want to as a millennial.