A lot of millennials delay buying a home for financial reasons. Most young people would love to own their own house to put down roots and raise a family. Before house hunting, spend some time with a calculator, bills and bank statements. According to a recent article by businessinsider.com, most millennials realize they are wasting money on rent. The article warns young people against combining too many major life events such as getting married, having children, adopting a pet and buying a home. If possible, match your home buying with a job hunt. Next, work on financial goals. Consider a few of the foolish money moves some people make before buying a home so you can afford a nicer house in your neighborhood of choice.
Investing down payment in the stock market
Some young people hear about people making millions of dollars in the stock market. They don’t realize most people remained invested over a period of decades, not days, weeks or months. One of the worst financial moves is to invest down payment money into the stock market thinking it will provide a larger down payment. In many cases, people lose all of their initial investment as companies file for bankruptcy or penny stocks spiral down to zero.
Using an emergency fund for a down payment
Another common money mistake is to use an emergency fund for a down payment on a home. Once you move into your home, you realize you have a medical emergency or need a new car. Save in two separate accounts or designate money in one account for two different purposes so you don’t steal from an emergency account to pay for a home you can’t afford.
Working under the table
When you sit down with a mortgage consultant, he or she wants to see your tax statement and well as pay stubs. By working under the table, you reduce the income needed to qualify for a mortgage. Always report income you make on your tax returns. Not only will it help during a tax audit, but helps you buy a better house.
Mortgage lenders look at your debt-to-income ratio so avoid having a lot of debt, taking out new credit cards or buying a car before receiving a pre-approval for a home loan. Wait until after closing on the home to make any major purchases.
At Realty Executives By Realty Choice, we have helped many millennials buying real estate in Springfield MO. For more tips on financial moves for buying a new home, please contact us.