As of late, my free time has consisted of plowing through the millions of “for sale” listings on Zillow.com, obsessing over impressive interior home décor on Pinterest and binge-watching HGTV.
In addition to this, I’ve attended more homeowner workshops than I can count on one hand. I think it’s pretty safe to say that I’m interested in buying my first home. I’m grateful to be surrounded by a group of friends who are also breaking into the market for the first time, but, it’s no secret that many millennials are shying away from becoming homeowners. I got a chance to chat with Lauren Allah, Realtor at Luxury Home Enterprises about the basics of buying a home and why everyone (no matter your age) should make that move.
It’s Not As Painful As You Think
A recent study from CNBC says that the average homeowner (to this day) is 38 times wealthier than a renter. Buying a home is “an escalator to wealth,” says self-made millionaire, David Bach.
Allah says the main reason that millennials don’t buy is because they’re afraid. We’re told that becoming homeowners is out of reach (mainly because of looming student loan debt) but she says it’s much more attainable than most think.
“A lot of my clients literally start off asking me for homes to rent. I only encourage them to rent if they’re looking for something temporarily. I feel like it’s a cultural thing almost, a lot of our parents didn’t talk to us about buying a home. I’ve noticed with different ethnicities that their parents have set them up for homeownership. They make investments to pass along from generation to generation,” Allah states.
No worries if your parents have never had the “talk” with you, Allah assures that you don’t need as much as you think to start the process. “This is the perfect time, perfect age, and it’s a lot more affordable than people believe.”
So, what exactly do you need to become a homeowner?
“The minimum credit score I need to see is a 640 FICO score. If you’re interested in buying and you know that your credit isn’t up to par then you need to start working on that.” Allah adds that you should also have at least three-to-six months of mortgage payments saved. The rest of the basics? “I typically ask them what cities they’re looking in, how much they make and if they’ve been on the job for at least two years. For college students, via FHA (Federal Housing Association) guidelines, a recent college graduate only needs one month on the job to qualify to buy. FHA guidelines will allow those recent college grads to count their time in school as their employment history.”
As most millennials know, student loan debt has more than tripled since previous generations were going to college. This student loan debt (if not acted upon) also affects your credit, which can be a potential setback if not properly monitored. “Take the (credit) process very seriously. Understand that most Americans are in debt and the No. 1 reason is because of student loans. It’s life. If you don’t have credit at all, I would advise you to open up a credit card or two and try to keep it at a minimum. Keep in mind that you may have a high-interest rate but as long as you keep your balance low and pay all of your bills on time then you’re fine.”
What if you don’t qualify for a credit card, though?
“I recommend that all of my clients who don’t qualify for a credit card to open up a secured credit card. Don’t try to live above your means and have it all if you know you can’t afford it. Sacrifice for the moment to make an investment to pass down to generations.” Allah concludes.
Stay tuned for part 2 of “To Buy or Not to Buy: The Millennial Homebuying Process”
If you’re interested in buying or renting a home in the state of Michigan, you can contact Lauren Allah for a consultation at firstname.lastname@example.org.
Danielle D. Hughes is a social entrepreneur, journalist, and youth advocate. When she’s not writing or covering news, you’ll find her at church, spending time with loved ones or enjoying a great read! Keep up with her: @danielledhughes