Life has a way of dropping milestones in front of us when we least expect it.
First, you graduated from college, and you moved out of your dorm. Maybe you went back to sleeping on your parent’s couch. Sooner or later the biggest milestone of all is about to drop. You need your own house.
Being the generation that survived the Great Recession, “Millennials” are bound to measure major life changes in absolutes. So it’s no surprise that when Millennials enter the real estate market, they are looking to purchase large “forever homes” where they can raise families.
Many are finally leaving home and scooping up el paso real estate and in other major cities. While young homebuyers have managed to get financial help from their parents, there are others who are struggling to pay off a simple starter home.
Here are some tips on how you can save money to buy your first home.
Take Risks
A common complaint about Millennials is that they are scared of taking risks. It’s true because they’re scared of taking the wrong risk.
During the Recession, young people had to hear dozens of horror stories about home foreclosures. Millennials have good reason to think more than twice before setting a down payment.
While the public likes to believe the real estate market has learned its lesson, they still employ the same tricks.
Most banks will encourage naive buyers to sign up for a no money down home loan. The less you put up for a down payment, the more you will have to make up in interest on your mortgage.
The ideal rate for a down payment on a home is around 20%. Since most millennials make under $61,000, it’s best to shoot for 3.5% FHA loan.
Get Schooled on Taxes
In high school, you may have taken a consumer math course. If not, you need to brush up on the basic math skills you need to review and calculate your taxes.
At some point, you’ll be interested in selling your starter home to move on to your “forever” one.
Selling the property too quickly could have adverse effects on your capital gains tax. Tax laws state that homeowners are exempt from paying capital gains on a house sale if the property was resided in for two years or more.
Curb Your Enthusiasm
Younger workers have built a reputation of moving from job to job. Some start as part-time and work their way into full-time. When they do land a job that pays well, they want to flaunt their income on big-ticket vanity items.
Let’s say you have a job that allows you to put 20% on a respectable home in the suburbs. Your salary may be able to cover the monthly mortgage, but what about your car and student loans? You’ll also need utilities like heating, electricity, and basic living necessities.
Each paycheck you earn should have a set of funds divided to fulfill your costs of living. Set up a separate bank account reserved for paying bills. Create a year-to-date record of monthly expenses through a spreadsheet program like Microsoft Excel.
