Millennial & First-time Home Buyers: Before You Apply
Publish Date: 3/28/2018

With the majority of millennials having made their way past educational goals and situated into careers, it’s a logical next step to becoming the next set of home owners to put down roots. If you’ve found yourself clicking through dream houses online but aren’t sure where to begin the process of making it a reality, here are some things you can do to prepare.

Check Out Your Credit

If you have never done so before, get a copy of your credit report, preferably one that covers reporting from every major agency (Equifax, TransUnion, Experian). You are entitled to at least one free report a year, and many credit card companies now offer free monthly updates on credit reports. If there are errors or discrepancies, work to get those cleared up well in advance of applying for a loan or a pre-qualification process. A good credit score is determined by the types of debt you have, the total amount you owe, and your payment history. Everything counts, not just credit cards. Student loans, car payments, and even late rent can show up on a credit report and negatively affect your score, as well as your chances for getting a mortgage down the road.

Pare Down Your Debt

Take serious stock of what you make, what you owe, and create a realistic budget designed towards paying down the smallest debts first, while creating a savings at the same time. Sound complicated? It’s really not, it just takes discipline and diligence. One of our Broker/Owners, Jack Bailey in Greensboro, NC has been teaching a “Get Out of Debt Class” for free for decades (read about that here) to help potential home buyers get ready for the mortgage lending process. There are also a ton of great books on the topic. Consider picking up a used copy online of something like “Total Money Makeover” by Dave Ramsey to guide specific steps.

What Can You Afford?

Once your financial house is in order and you’ve met your savings goal for a down payment, figure out how much home you’re going to be able to reasonably buy. Mortgage lenders and brokers have a direct, vested interest in getting you to borrow as much as possible within your range. The more you borrow, they more they earn. Remember that only you can determine what you’re comfortable with, so take the time to go through this step and find out. Lenders will be looking to see if your monthly total debt payments is more than 36% of your gross monthly income. Then they will calculate 28% of your gross monthly income. That number needs to cover the mortgage payment itself, taxes and insurance. There may be other expenses you are currently overlooking as a renter, too, such as water or trash and recycling services, so do your research to save yourself future shock. There are several online mortgage calculators online, try out one or two and get a sense of your house buying potential and comfort levels.

Get Organized & Go

It’s a good idea to get pre-qualified for a home loan before you start seriously shopping, so your eyes don’t get bigger than your wallet and you become disappointed when your dream home is out of reach. Items you will need to bring with you for an appointment with a lender or mortgage broker:

- Most current year completed tax return, including W-2 forms

- Proof of employment via a check stub or letter from your employer

- Bank statements

- Driver’s license or other state/federal issued IDs

- Letters verifying any gifts you have received for a down payment, if any


Don’t Be Afraid to Ask Questions

When Help-U-Sell Real Estate began, a core business principle was to share knowledge freely with home buyers and sellers that had always been previously kept under wraps by traditional brokers. That antiquated practice was a justification for charging a 6% commission on home sales. 43 years later, while many other companies have come and gone, Help-U-Sell proudly remains strong with the original set-fee structure, home seller savings, and open communication with buyers and sellers.

While the internet has removed much of the mystery of home buying and selling, the need for a knowledgeable broker or agent hasn’t changed when it comes to guiding the more nuanced aspects of the transaction. Use our office locator to find an office near you and ask away. We are happy to help.

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