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Home Ownership For Millennials

We’ve all heard about the Baby Boomer Generation, Generation X, but what about the Millennials? The Millennials are those born between 1980 and 2000. This generation lives in a completely different world than the Baby Boomers or Generation X and they make be the largest group of homebuyers in the coming years. Although the eldest members of Millennials are approaching 30, many of them are making the plunge into home ownership at a younger age than previous generations.Deflated home prices and near record-low interest rates have many young homebuyers looking to jump into the housing market. Experts say that if they can afford it, now is the time to make the leap, but it’s important to think beyond the monthly mortgage payment.Saving for a down payment and buying a home requires a lot of fiscal responsibility and planning to avoid overcommitting to a house.How Much Can You Afford?Before launching the hunt, potential homeowners need to have a realistic understanding of what they can afford. One way to get a clear picture of your financial outlook is to meet with a mortgage broker well before you begin home shopping. Most new homeowners focus only on the mortgage payment, but the financial responsibility goes well past that. Mortgage payments comprise two-thirds of all your home-buying expenses and the rest of the budget will need to cover taxes, homeowner’s insurance, hazard insurance, utilities, maintenance and for some, Home Owner’s Association (HOA) fees.Meeting with a professional can be a very beneficial option because they can outline how much you can afford each month the mortgage balance, and then the down payment required for that loan.Some experts recommend seeing what the bank will lend you, and then take 20 percent less. For example, if the bank says you can afford a $200,000 home, you should actually purchase a $160,000 home. By borrowing less, it prevents people from overextending themselves and allows them to save enough for the down payment without dipping into a retirement or emergency fund.Decrease Your Expenses When young homeowners are told they need tens of thousands of dollars to purchase a home, it can be overwhelming. But the truth is, it is possible to save the money faster than you may think. Experts recommend tightening the budget at least a couple of years before you plan on buying a house, but simple changes can make a big difference to save money in just a few months. The first step is to understand what you spend and where your money goes. Until you get a handle on what you spend, you can’t get a handle on what you can save. Go through the budget, prioritize, and make sacrifices. Cut anywhere you can, and pay yourself first. Treat your savings account like a monthly bill that is non-negotiable.Increasing Your Income When saving for a house, it can be difficult to find extra money in the budget. Obviously the first step is to be disciplined in spending, but for some this is not enough. When young people are saving for a house, it can be difficult to make ends meet while trying to put as much into savings as possible. One way to increase revenue is to look into additional revenue sources.For example, instead of giving physical gifts for birthdays or holidays, take the cash you would’ve spent and put it towards the home. This may be difficult for young children, but perhaps put the anniversary dinner money in the savings fund and spend a cozy night at home. Think about things you can do from your house, perhaps you’re a wiz at math and can offer tutoring sessions, piano lessons, or sell handcrafted or un-necessary items. Make your tax return part of your down payment savings.Purchasing a home can be a great accomplishment and a great investment, but it is important that the decision makes financial sense. Assess your job’s stability and whether you’ll have a job in three to five years or if you’ve a major expense in the next few years, says Almonte. Consider whether now is really the best time for you to use your savings for a home. If the ducks line up in a row and you are disciplined in preparation and savings, now might be the best time the take the leap into home ownership.

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