What Millennials Need to Know About Home Loans

One of the most pervasive myths about Millennials in the recent decade is that they do not want to purchase a home. This can come from the fixed nature of wages and the influx of educated professionals in the marketplace. Others think that it’s just the attitude of the generation. Regardless, most Millennials have relegated to leasing instead of buying. Aside from public perception of Millennials, rising interest rates are another common fear which makes taking on a loan more daunting. While most may have the experience of leasing or buying a car, loans for houses are a different level of responsibility. With such a wide range of loans available, it is important to recognize which loan works for you. Charleston Mortgage Lenders offer many options when buying a home for the first time, such as first-time loans and financing. These can be a big help when deciding what to borrow.

Find out what you can afford

Knowing what you can afford is the first step to finding the best loan for you. As we saw in the 2008 recession, getting a loan for a house you cannot make the payments for is a bad move. To better assess your budget, first, consider the neighborhood of Charleston you wish to buy a home in, and see if it is financially feasible. Make reasonable judgment calls that are large in scope and slowly work towards the actual home you plan on buying. Make sure your other payments are still comfortable and that you can make forward progress in your other investments, like replacing your old high school car for a new truck before it breaks down. 

Building credit

Another growing concern for Millennials is their preference of debit cards over credit cards. Although this helps ensure you don’t spend more than you’re worth, it also prevents you from building credit. A good credit score is built with time and consistency. The strength of your credit score enables you to be eligible for better or more flexible loans. Millennials should be aware of their credit score and do everything they can to make their payments on time. Start as early as possible to show responsibility with money.

Career stability

The Bureau of Labor Statistics ran a study and found that on average, people change jobs throughout their careers 10-15 times. This comes into play when considering income stability. It is crucial to internalize how long-term a home loan really is. Young home-buyers need to be sure of how long they expect to live in the house they are looking to buy, as well as if they plan on making career changes. If you only plan on staying in that home for a few years, you may be jumping the gun on purchasing a home.

Down payments

Most new home-buyers are relatively uneducated about the down-payments they will need to make when initiating a mortgage. While these rates range from three to twenty percent of the home’s total cost, they can be manipulated based on what you are trying to receive in your loan. The percentage paid for with a downpayment can have an effect on your interest rate. The downpayment can “set the tone” for the rest of your mortgage and it’s always best to have a good start, especially for such a long period loan.

Make a plan

Finding the right loan for yourself is a long process, to say the least. Planning is the best thing anyone can do when deciding to take out a loan. As Millennials are more accustomed to getting and receiving information and goods faster than ever before, this might be the hardest pill to swallow. The more time is taken to determine what works best, the better off you will be in the long-run. Consult with your bank to find the right information and solutions for you. Deciding to buy a home is a big decision to make, but it's also one of the best investments in this market. Contact our team of experts for all your Charleston real estate needs.