It’s finally here, the first time you get to choose a new place to call home. The big question is: are you prepared for it? Many Millennials are quite ready; in fact, they represent the largest group of homebuyers in America. In other words, if you’re in your 20s, you are part of the generation that is taking over the house-buying arena. So how will you know if you are prepared, and have saved enough money for a first home purchase? There are a few things to consider:
Budget Is Everything
If your budget isn’t set up properly, you may be in danger of future financial problems. Make sure you have reviewed your budget before you begin looking for your home, just so you know how much home you can afford. A term to keep in mind that is often used in the financial industry is the Debt-to-Income ratio (DTI). Put simply, your DTI is a comparison of how much debt you have (and will have) to your income stream. This comparison is very important to include in your budget when you’re creating or reviewing it.
Remember, when buying a home for the first time, you will be taking on more debt — often more than $100,000. So, if you already have a lot of debt and a low income, loan agencies may think twice about offering a large mortgage to you. Being able to pay off your debt is key in building your financial present and future.
A Savings Account Creates Opportunities
During the home-buying process, make sure you’re saving as much money as possible. A savings account is important because most loan agencies will require a down payment on the home, which would require a large amount of money in your account before you buy. It’s best to compare banks to find the best offerings that match your lifestyle and financial goals. As you search for a new bank, remember that online banking can offer special accounts that incentivize you to save money. One of which is the absence of fees — which normal banks would charge — including start-up fees, monthly fees, and more. Other perks could include the ability to set up transfers when you get paid.
There are plenty of other ways to grow your savings account on your own. One could be to pay yourself before anyone else. To do this, you can set up automatic transfers from checking to savings on your pay day. Another suggestion would be to spend money at the grocery store, instead of eating out. There are plenty of ways to save, just find what works for you.
Secondary Income May Be Necessary
Finally, if you find homes are out of your price range, you may want to consider a “side hustle”. There are many opportunities that won’t overwhelm your schedule, and are easy to pick up. any jobs allow you to work from home, such as Survey Junkie, or Swagbucks. Both companies will pay you to take surveys; the length of a survey will determine how much you receive. Another at-home job is Inbox Dollars; they ask you to watch videos and give feedback on them — simple, quick, and easy.
Other excellent side hustles include ridesharing, homestay, and food delivery services. Though each may be simple, they will require more work than taking surveys or watching videos. As you make your choice on a secondary form of income, keep in mind that you are working to increase your savings, which will allow you to buy the home that you want.
Fun Should Be a Part of the Process
No matter where you are in the process, buying your first home is one of the most exciting times of your life. Though it takes preparation and planning, make sure you have fun while finding the home you’re happy with – after all, it will be yours soon!