After a steady increase in home prices, many millennial homebuyers feel discouraged by financial challenges when considering entering the housing market. This pressure is particularly heavy on millennial homebuyers, which has caused many to only stick to long-term rentals.
In fact, Redfin recently found that over half of millennial homebuyers are concerned about having enough money for a down payment. Furthermore, additional concerns included in a desirable location (45%), rising home prices (41%), and increased competition for bidding wars (28%).
The Austin housing market has also become especially competitive over the last several years. The increased pressure is not only discouraging millennials from purchasing homes, it is lowering their chances of submitting winning offers. With the average home receiving two offers and going pending within 14 days, what can millennials do to improve their buying power?
Here are a few tips that will give millennials a leg up when searching for homes:
Keep Close Tabs on Your Credit Score
A first time homebuyer will provide proof that s/he is not a risky bet for lenders. Consequently, a new homebuyer has to provide a picture of a solid financial background. In order to get a full picture of your credit history, mortgage companies will look at open accounts, credit score, payment history, and collections. Follow these guidelines to ensure you’re in good standing:
- Pay off all your accounts in full on a monthly basis – always end with a balance of zero
- Set up automatic bill payments to pay accounts on time
- Regularly check to make sure you don’t have any accounts in collections
Leave a Paper Trail
Many people overemphasis the importance of avoiding faults when building credit is just as important. Although you might be covering expenses regularly and on time, financial institutions won’t be able to recognize that without a paper trail. Using credit cards when possible is one way for younger individuals to build their positive credit reputation.
Start Saving for a Down Payment
Although there are many options for flexible down payment options, more money down will ease the long-term stress of high payments and interest rates. More importantly, having a greater down payment will lower the total amount that you need financed. Lenders will be more likely to approve a mortgage that presents less risk for them overall.
Get Pre-approved and Come in With Strong Offers
Lastly, getting pre-approved for a financing gives you a leg up when competing for homes. Sellers want to be confident that the transaction will close without a hitch. Typically, a seller is going to desire aa buyer with an approved mortgage. Without a doubt, it’s one less concern for the potential of a failed transaction which makes your offer more appealing.
If you have any questions about mortgage or down payment options,contact us for more information. Happy house hunting!
This is a guest post written by Angie Bersin | REDFIN