While millennials make up a large portion of potential homebuyers, high prices, mortgage rules, and many other factors make it extremely difficult for them to realize their dream of homeownership.
“A full 21 percent of Millennials don’t have any money saved and a whopping 62 percent of people who do have savings have less than $1,000. That kind of money doesn’t buy a house, but Millennials are struggling to put more cash away in their bank accounts,” according to MSN’s, Will The Millennial Generation Embrace Homeownership?
The author explains, “That could be due to the fact that today’s 20-somethings earn 20 percent less than the Baby Boomer generation did when they were in their 20s. And yet, Millennials also have exponentially more student loan debt to repay than any other generation before them.”
With all that being said, there are couples out there like Larry and Joan who have bought their first home together. The dual income is helpful. If you’re in this group, the time is now to start preparing, from saving more aggressively to getting your pre-approval.
If you’re on the homebuyer track, get started on the right foot with the following prep.
Start cutting costs
While spending less and saving more might seem like an obvious first step, it’s often one of the most difficult, with many millennials living paycheck to paycheck.
Start small by making coffee at home and skipping happy hour, opting for post-work drinks just once a month. This will get you on your way, but won’t carve out enough room in the budget for a down payment.
To step up your savings, consider how you can change your living situation, whether you move into a cheaper apartment or live with a family member. While staying with mom or dad isn’t ideal, especially if you’re a couple, it will drastically reduce your expenses.
Other ways to chop big expenses include getting rid of cable, ditching your gym membership, and cutting back on your mobile data plan.
Get your credit in check
Your credit score is key when qualifying for a mortgage; therefore, it’s critical that your credit be in good shape.
Request a copy of your credit report from a consumer credit reporting agency, such as TransUnion—you get one free report each year. Read the report carefully to make sure the information is accurate; errors can negatively impact your chances of getting a favourable home loan.
Then, check your score. You should aim for the 700 range. If it’s not there yet, find out what affects your credit score and focus on bringing it up.
Find a side hustle
Believe it or not, it’s not as difficult as it might seem to create a lucrative side hustle.
If you both travel a lot and live in a desirable location, check with your landlord to see if you can rent out your place while you’re away. This can pull in a few hundred bucks over a weekend! In addition to checking with your landlord, make sure you’re aware of the new short term rental regulations.
If renting out your home isn’t an option, there are many other things you can do together or separately to make money on the side, like dog-walking, driving for Lyft, or getting one of those cyclist food delivery gigs.
Not everyone can afford a home in their current or preferred location. Now is the time to do your research, determine average housing costs in your area, and make plans to move if need-be.
Start by looking at homes in your region and then brainstorm other potential locations to research. If you’re thinking of moving out of the GTA, this extra preparation time is ideal for visiting new cities and towns to see if you’d enjoy living there. Bonus: you get to make more memories together before settling into your dream home.
If your credit is in good shape and you have some money saved up, now is a great time to start the pre-approval process. Depending on your financial situation and employment status, this can take some time. In most cases, you need to show pre-approval before the Agreement of Purchase and Sale can be finalized.
Once completed, your pre-approval is valid for 60 to 90 days. If house hunting takes longer than that, it can be updated.
Get ready to be a homeowner
Buying a home will be one of the biggest decisions and financial investments you make as a couple. If you’re thinking of buying, make sure it’s a detailed and lengthy discussion you have together. Get your finances in order, start the pre-approval process, and research neighbourhoods! If you’re considering buying a new home, then research different builders, too!
When you find a home you love, you’ll be glad you spent the time to prepare now.