That moment when you just can’t stand writing one more check to your landlord so that he can pay his mortgage payment. That is the moment you are emotionally ready to buy your own home, at least according to investment experts.
We’d like to extend that list of moments to include the longing to get the kids a dog, drooling over the weird paint color you’d love to use to adorn the bedroom walls and the green thumb, itching to dig in its own backyard.
Now starts the sometimes-long road to home ownership that millennials just like you have traveled. Yup, others have paved the way for you, so if you follow their example, at least the examples of those who’ve been successful, you’ll soon be picking up dog poop in your very own backyard.
Cold, hard cash
Houses cost money. Big money. At least initially. And, according to a recent apartmentlist.com survey, of the 80 percent of millennials who want to buy a home, only 68 percent of them have managed to save less than $1,000 and a sad 44 percent of that group have nothing saved.
“Based on their current rate of monthly savings, our survey found that millennials in many of the nation’s large metros will need at least a decade to save enough money for a 20 percent down payment on a condo,” claim the site’s Andrew Woo and Chris Salviati.
They go on to say that millennials in the pricier large metros, such as San Francisco, San Diego and San Jose have a waiting time of “almost 24 years.” Buyers armed with a 10 percent down payment can shorten the wait to five years or less, according to the study.
Which means that those who choose an FHA-backed loan, a Fannie or Freddie or USDA loan, with an even lower down payment requirement, are sitting pretty. Then, there are the many local, regional, state and national down payment assistance programs. See? Every cloud has its silver lining.
The moral of the story is to start saving now. Yes, you have student loan debt and, yes, you need to pay rent and all of the other typical life expenses. But paying yourself first should be your priority if you want to buy a home.
The word “millennial” is so often followed by “student loan debt,” in the media one would think it’s the generation’s middle name. While it’s true that this debt is at an all-time high, and some millennials are on the hook to repay up to $53,000, it’s not the impediment to home ownership that some make it out to be.
The simplistic will advise you to boost your income and eliminate your debt when considering purchasing a home. While sage advice, it’s unrealistic to tell someone who longs to purchase a home to wait the aforementioned 24 years.
And, there is relief for many with two recent announcements by Fannie Mae.
Currently, lenders look at a borrower’s debt-to-income ratio (how much you owe vs. how much you earn, known as DTI) and require that it be no higher than 36 percent. After July 29 of this year, however, that ratio can be as high as 50 percent, under certain conditions.
Then, in April, Fannie Mae announced a new policy specifically aimed at millennial homebuyers who have student loan debt. Basically, it excludes any debt that isn’t mortgage-related (auto loans, credit cards and, yes, student loans) from the borrower’s DTI, as long as these debts are paid by someone else (such as a parent).
Curious about your debt-to-income ratio? Use the online calculator at nerdwallet.com.
If your DTI is still too high, despite the new solutions from Fannie Mae, get busy increasing your income and decreasing your debt. The College Investor offers a brilliant list of 10 “Easy” Ways to Earn $100 per Month and also see 8 Ways to Eliminate your Student Loan Debt.
So, what if it’s not necessarily student loan debt but a lousy credit history standing between you and homeownership? There’s good news on that front as well.
The so-called “Big Three” credit reporting agencies, Experian, Equifax and TransUnion recently announced that most tax liens and civil judgments will no longer end up on credit reports, provided the information in the creditors’ report isn’t complete.
“Specifically, the data [submitted to the credit reporting agency] must include the person’s name, address, and either date of birth or Social Security number,” according to Diana Olick at cnbc.com.
Apparently, errors like this are common, impacting a large number of loan applicants. “With these hits to their credit removed, their scores could go up by as much as 20 points,” Olick claims.
Even if you don’t have judgments or liens on your credit record, it’s always a good idea to order all three reports and pore over them for other mistakes. The Federal Trade Commission claims that about 20 percent of American consumers have a mistake on their reports. Ridding your report of errors is one of the easiest ways to increase your credit score.
In fact, the FTC study found that “ . . . about 20 percent of consumers who identified errors on one of their three major credit reports experienced an increase in their credit score that resulted in a decrease in their credit risk tier . . .”
The FTC offers advice on not only how to get free copies of your credit reports but how to dispute erroneous information as well.
If you truly want to buy a home, stop listening to the naysayers in the media. The millennial generation currently makes up the largest group of first-time homebuyers, so obviously, not all is the gloom and doom they say it is. Especially with the new programs and relaxed requirements, buying a home is easier than you think.
I Grew Up Here. I Live Here. I Sell Homes Here. Hi, I’m Jennifer Y. Ross, a licensed real estate broker and your Westchester County NY real estate community and home expert. I grew up here. I live here. I work here.
To learn more about how I help my clients check out my bio video – video link.
Just like you I was considering a move to Westchester County not too long ago. I was very likely in your shoes – living in NYC and starting to outgrow my current living situation. If you are ready to start exploring Westchester Communities and Homes, your first stop should be a Platinum Drive Realty Luxury Tour – link to learn more.Contact me to schedule yoursuburban safari today! – link to schedule tour.
Areas of Expertise: Larchmont Real Estate, Mamaroneck Real Estate, Rye Real Estate, Rye Neck Real Estate, Purchase Real Estate, Harrison Real Estate, New Rochelle Real Estate, Pelham Real Estate and Bronxville Real Estate.
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Introduction to Jennifer Y. Ross & The Westchester Living Team at COMPASS
Jennifer comes from Platinum Drive to Compass as an experienced agent. She epitomized Platinum Drive Realty’s motto “I grew up here. I live here. I sell homes here” and she is known for providing each of her clients with an exceptional experience guided by her expert local knowledge. She works tirelessly to ensure each of her clients has a professional, enjoyable and successful Westchester community & home buying search or selling experience. She often remains very friendly with her clients and welcomes the opportunity to be an ongoing resource as they settle into Westchester Living. Every step she takes will embody her core principals; integrity can never be compromised, clients’ interests always come first and character, commitment, and passion truly matter. For her buyer clients, Jennifer looks forward to the opportunity of being “Your NYC to Westchester” guide and real estate broker. For her seller clients, Jennifer is proficient at implementing an aggressive marketing strategy in order to obtain the best price possible in a highly efficient and seamless manner. Jennifer thoroughly enjoys assisting buyer clients in navigating the landscape of the Westchester residential real estate market. She is skilled at enabling clients to define where they see opportunity & facilitating the process from initial search through closing. Jennifer was awarded the Platinum Drive Star Award for Outstanding Performance in Sales & Client Services in 2014 & Platinum Drive Realty’s Superstar Award for Excellence in Sales and Client Services 2015 & 2016 for her outstanding performance in sales and client service. In addition to her passion for local real estate, Jennifer has a firsthand understanding of home renovation and new construction. Upon moving from NYC to Scarsdale, she and her husband performed an extensive renovation on their first home. After completion, they moved onto their second project in Larchmont, a full house renovation and expansion. More recently she is active with local developers who specialize in new home construction, home expansions and renovations. Jennifer has the ability to understand a home’s full potential and can help clients find or create their dream home. Jennifer was the Manager of Platinum Drive Realty’s Larchmont Office. Jennifer was raised in Scarsdale. After graduating from Scarsdale High School, Jennifer received a BA in Child Study & Sociology from Tufts University and an MA in Language & Literacy from New York University. Jennifer currently lives in Larchmont with her husband, Michael, and their three sons, Braden, Devon & Zane. She specializes in communities in Southern Westchester with a concentrated focus on the Sound Shore Communities of Larchmont, Mamaroneck, Rye Neck, Rye, New Rochelle as well as her hometown of Scarsdale. Prior to real estate, Jennifer was a teacher in the Mamaroneck Public Schools. Jennifer has a deep understanding of the local school systems and the needs of young families.
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Jennifer is a Licensed Associate Real Estate Broker & has her Accredited Buyer Representative designation (ABR) and her Seller Representative Specialist designation (SRS). Jennifer is a member of the Hudson Gateway Association of Realtors & the National Association of Realtors. Jennifer’s
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