Trulia released a blog where they mentioned that “buying a home is 23% cheaper than renting nationwide for millennials.” As we mentioned, the Hispanic Millennials (Hispennials) have a strong desire for homeownership and they represent 21% of all millennials nationwide.
So, if you are a millennial thinking about buying a home, here is a list of 10 steps to help you become a homeowner:
- Organize Your Documents. There is a list of paperwork that the loan officer is going to require for your loan, so make sure you have all of them ready. Your loan officer can generate your credit report, but if you are not sure about how it looks at the moment, it is a good idea to first generate one yourself and make sure it is in order. If it is not in order, you have to take care of some of that debt before you can move on to the next step.
- Check Your Budget. How much of your income is currently allocated to housing? This is also known as your Debt to Income (DTI) Ratio (the lower the number, the greater chance to obtain a loan). Lenders want to keep it below 36, so here is a calculator from Bankrate to help you find out what your DTI is. Also, how much money do you have to put towards your down payment? There are many programs available for as low as 3% down. Here is a list of places you can look for down payment assistance.
- Get Prequalified and Preapproved. Yes, they are two different things! Find a local loan officer who can help you with your loan. Based on some questions they will ask you, they will be able to prequalify you. Once you give them all of the paperwork and they analyze all of the information, they will be able to give you a preapproval letter (I recommend you get that letter, as it will make your offer more impressive; The letter will show the current homeowner or builder that you are a serious buyer).
- Find a Local Real Estate Professional. For many, this step will be number one on the list as a real estate professional can help you step-by-step through the process. What I am saying is that I want to make sure that you find a ‘professional’ who knows your local market as well as what is going on in the current real estate market. Knowing this information can help you simply understand all the changes that are going on right now. Do your homework! Research social media and see what type of information each agent is sharing, and if possible, look for some reviews from past customers.
- Search for a Home. Again, a real estate professional can help you with this. Or, like many buyers, you can find information online right now. You must be careful, however, that the website you are visiting is giving you current information and doesn’t show a house as available when in reality it was sold already. An agent will be able to help you find current information in your market place.
- Make an Offer. If you have already found a house and you have fallen in love with it, make an offer! Now, if you are like many Latinos, we take mom and dad and the entire family to look at the house first. Listen to the advice of your real estate agent, there is a reason why he/she is the professional! I know our parents like to bargain, but there is a lack of inventory in many markets. During the time that you are waiting for a counter-offer, another buyer might come and present a better offer and you might end up losing the house. So, be ready for this!
- Get the Funds to Buy. If you have already received preapproval, you are half way finished with this step. If you got a prequalification, now is the time to get all your paperwork to your loan officer to get the right loan for you and your family. Don’t waste time. Give all of the information necessary to your loan officer as soon as he/she requests it, and always ask your loan officer before making and major changes to your credit. This is a very important period of time, so don’t go buying a new car, opening a new credit card, or changing jobs. This is not the time for that! Things like that can cause you to be denied a loan.
- Get a Home Inspection. Even if you are buying a new home, I always recommended that the buyers get an inspection. Yes, with a new home you will get some warranties for the first few years, but sometimes the workers are not as careful and you will encounter some issues. If the house is old, you will have a better understanding of the life expectancy of your house and the inspector will usually give you tips to improve it.
- Have the Home Appraised. This will be a requirement for many loans and will also give an idea of how much your house is really worth to the bank that is giving you a loan.
- Closing. the big day is here! It is the moment where you get to sign all of the paperwork and finally receive the keys to your new home!
This may look like it is hard work, or like it is too complicated and that you don’t know where to start. The truth is that It is hard work, but someone is willing to do it for you — your agent!
If you are ready and willing to buy a home, call your local real estate agent today and they will take care of all these steps and hold your hand until the closing.