The National Association of Realtors’ 2019 report on home buyer and seller generational trends shows millennial home buyers have overtaken baby boomers and Gen Xers in the real estate market for the fifth straight year.
While it’s encouraging to see this younger generation making such a huge financial decision, it’s important that they understand and take the right steps toward homeownership.
If you’re a millennial looking for homes for sale in Kalamazoo MI, here are a few helpful tips to keep in mind:
Make sure your finances are in order
Before you start looking for homes, be sure you’re financially ready to own one. All you need is a pen and a piece of paper to do the math.
In reviewing mortgage applications, most lending institutions follow the “28/36” rule, which means your mortgage payment, insurance, and property taxes should not exceed 28% of your gross monthly income. And when adding total debt payments, such as your college loan and credit card debt, the sum should not be more than 36% of your income.
Going beyond these figures can make you financially vulnerable, which might lead to foreclosure. Your goal is to be able to comfortably afford your homeownership costs while paying off your debts – something that will require dedication, job stability, and some sacrifice.
Prepare all necessary documents and requirements
The home buying process will be easier for you if you have all the important documents in order. Stay organized by collecting your government-issued ID, most recent credit report, W-2 forms, verification from your employer, tax returns, bank statements, and other important documents, and keep them in a single box or folder.
Remember to create photocopies, or scan everything and upload them to the cloud so you’ll always have a copy in case you lose anything.
Save for the down payment
97% of millennial home buyers are able to purchase a home through a mortgage. It’s very important to put down a strong down payment, as this will effectively lower your interest and make it faster for you to pay off your mortgage.
Putting a down payment of 10% to 20% is a smart move. If you put down 20%, you’ll also avoid paying private mortgage insurance (PMI), which serves as protection for insurance lenders in the event that you stop making your mortgage payments.
Get info on comparables
Most millennials might find this step tedious and time-consuming, but researching comparables will make the home buying process go more smoothly.
Use real estate websites like Zillow, Trulia, or Redfin to collect detailed info on properties similar to what you’re planning to buy and located in the areayou’re interested in. Knowing how to navigate the Multiple Listing Service or MLS will also give you access to relevant real estate data and information. The info you gather will give you a good idea on the price points to expect for the kind of home you’re looking for. Conversely, it will help you see the types of properties available at your target price range.
As long as you do your homework, create a strategic plan towards your goal, get your finances in order, and work closely with your real estate agent, you’re already on your way to getting the keys to your new home!
Looking for a home for sale in Kalamazoo, MI, Portage, MI, or other sought-after communities in West Michigan? Get in touch with Stirk Realty Group today by calling 269.207.7894 or by sending an email to Team(at)StirkRealtyGroup(dotted)com.