After an almost 12 percent increase in median home prices over the last two years, many Utah
homebuyers are discouraged by the idea of saving for a home. In fact, a study by Redfin found
that 50% of millennial homebuyers’ top concern is having enough money for a down payment.
Other concerns included affordability in a desirable location (45%), rising home prices (41%),
and increased competition for bidding wars (28%). These concerns along with the inflated
market have led over 65 percent of millennials to seek out a secondary income.
Even though the average home in Salt Lake City typically sells for the list price, the typical down
payment is still just over 21 percent.
With competition increasing and prices rising, how can you improve your chances of submitting
a winning offer? And more importantly, what financial tips can give millennials an advantage
when searching for homes?
Here are a few tips to ensure you find the right home at a manageable price:
Keep an Eye On Your Credit Score and Finances
Before mortgage brokers approve you for a loan, they’re going to want to see that you have a
history of paying your bills consistently and on time. Lenders are going to use a combination of
your credit score, types of accounts, payment history, and collections to get an idea of your
financial history and determine how much, if any, money they’re willing to trust you with. In order
to boost your credit score and improve your chances of getting a favorable mortgage rate, you’ll
want to make sure to pay down as much of your debt as you can, set up automatic bill
payments so that you know your bills are all paid on time, and use a credit card to establish a
good credit history all before you apply for a mortgage.
Get Pre-Qualified For a Mortgage
Unless you’re paying entirely in cash, get prequalified for a mortgage before you start looking at
homes. You can usually do this over the phone or online and your mortgage broker will take a
look at your finances and credit history to determine how large of a loan you qualify for and what
your mortgage rate will be based on your down payment.
At the same time, however, don’t assume that you’ll be able to afford a more expensive home
than you initially thought just because you qualified for a larger loan than you expected. Keep a
close eye on the monthly mortgage payment. If you can’t afford that, then you can’t afford the
home. This step will set your budget and help define the parameters for your house hunt.
Once you know your budget you’ll be prepared to act quickly and decisively to quickly snatch up
the house once you find it.
Consider the Closing Costs
Don’t forget about taxes, closing costs, property insurance, and other after-the-sale expenses.
The home itself isn’t the only thing you’ll be paying for during the home buying process so be
sure to keep those other costs in mind and factor them into your budget.
Figure out the home insurance and property tax rates in your state and calculate your closing
costs before you get started so that you can incorporate those fees into your budget. It could be
a good idea to get your home insurance through the same company that covers your car as
many insurance companies offer lower rates for bundling the two.
Find a Good Property Inspector
Similarly, don’t forget to hire a good property inspector. Every home has its secrets and there is
no exception. You don’t want to move into your new home only to find that it needs thousands of
dollars in repairs. So be sure to hire a reputable home inspector and ask them these 10
questions put together by the U.S. Department of Housing and Urban Development.