Michelle Anne Murphy's Blog
There are both younger and older Millennials today willing to purchase a home but want a realtor to guide them through the process due to a couple of mistakes they are afraid of committing. The most surprising thing about how Millennials buy homes is that they want a realtor to guide them through the process, because everyone, buyers as well as sellers, wants to make the right financial decisions, to avoid real estate regret and unnecessary pressure from high market conditions.
However, what can Millennials do to avoid real estate regret? Although most people could think of driving around the area all day to get an idea of what the market is like, it is essential to get advice from someone with some experience and your interest in mind to help you avoid future complaints and nagging. As a result, many make such big decisions with their parents:
Parents have experience
With the interest of mortgage rates going higher and home prices increasing altogether. Parents could come in rescue with financial assistance and thus, try to have a share of buying decisions from the location of such property to the pricing and size.
Most times, your parents’ perspective on decision-making might seem different from yours, or you could perceive it to be biased and no relation to your situation and taste. Irrespective of this, endeavor to heed to their advice as it turns out in most times to be a wise approach.
Listen when they point out to you that the property might be overpriced
You could find a property and think it is the perfect one for you. They could be in an expensive area with multiple school districts, or have a lower level of crime rate due to tight security. They might be energy-efficient during the winter and so would save you money monthly. As a result of these advantages, you might think all these concessions are worth paying more without further negotiation. With your parents by your side with more experience, they can spot a problem or fault with the same property you're looking at and help you to use it as a bargaining chip.
Conversing openly with your parents on topics like real estate plans, money, and wills may seem difficult and awkward to you. But it will be wise of you to do so as real estate comes with a lot of different options and problems. Whatever the case may be, prepare yourself and start talking to them when making such a decision to support and guide you through.
If your parents are part of your real estate decision-making process, make certain to introduce them to your real estate agent so that you're all on the same page.
Your credit score can be a vast unknown when you are starting out in life. When you are just beginning you may not know what factors the financial world considers to calculate your creditworthiness. At this point, you are what the credit reporting agencies call credit invisible. To create a credit score, you will need to take your time and remain intentional. Websites like Nerdwallet.com and Annuity.org have information to build your credit score and financial health. Take your financial health seriously and be proactive about getting the information you need to create a stable future.
Annual Credit Reports
A good starting point is to order your credit reports from all three reporting agencies. You get a free one from each of them every twelve months. An easy way to remember to check on your report yearly would be to order them on or near your birthday. If you find errors on any of the reports take the time to have the reporting agency, make corrections; then follow up. Next step in creating a credit score would be to open a secured credit card. This type of card is a credit card where the credit limit is equal to the amount of money you deposit. Your neighborhood bank or nearby credit union that you have your current accounts with can help you.
Another way to build your credit is to take out a small credit builder loan. These credit-builder types of loans are designed to help you start developing a credit history. You can find them at credit unions and smaller community banks. When you take out this kind of loan, the money sits in an account, not accessible until paid in full. Make your payments on time and the financial institute reports those on-time payments to the credit reporting agencies. Once paid off the funds plus any interest is released to you. You now have the start of a credit score and perhaps a small emergency fund or start to a down payment.
Keep These in Mind
The essentials of building your credit score are:
- Making timely payments
- Keep your balance 30% or less of your available credit
- Monitor your credit reports
- Be patient
Time is your friend when you are just starting. By being patient and diligent, you will see a steady climb in your numbers. Like diet and exercise, financial health is only achieved by ongoing healthy habits.
If you have not ordered your credit reports in the last 12 months, order them this week and see where you stand.
Like most Americans, you probably carry some debt. Reaching your dreams such as saving for a down payment or registering for a class takes longer when you're also paying on money you owe. Paying it off might seem daunting when the only way you know is to either make more money or reduce expenses. There are other ways, though, to tackle debt. Here are three.
When using the avalanche method to pay off debt, organize debt by the highest interest rate to the lowest. Any extra funds you can come up with go toward the debt with the highest interest rate until it is paid off. Then, move to the debt with the next highest interest rate. Take the whole payment amount of the first debt and add it to the payment of the second highest debt, paying it much more quickly. As each debt is paid, move to the next highest interest rate until all debt is paid. Proponents of this method believe your debt is paid off faster with the least amount of interest paid.
This popular method to pay off debt focuses on paying off the smallest debts first, then taking that payment and adding it to the payment for the next lowest debt. As you pay each debt, add that payment amount to the next smallest debt's payment. Each time you pay off one debt, the amount you can throw at the subsequent debt increases in the same way a snowball rolling down a hill gets bigger and bigger. Eventually, you can apply the final amount to your last debt and pay it off more quickly. Champions of this method believe paying off smaller debts first provides a psychological boost, encouraging you to stay on track.
Both the avalanche method and the snowball method rely on your coming up with some extra cash in your monthly budget to throw at the first debt. But what if your budget is so tight that you can't add a regular amount to your monthly outgo? The snowflake method is different. Always pay minimums on all your debts, but whenever you have random cash, apply the extra to the smallest bill. So, if you sell something online or if a friend pays you back for dinner from a month ago, apply that extra to your smallest debt. Use birthday money, the five dollars you found in a coat pocket, or your tax refund to pay toward debt. Even though you’re not adding a regular amount to your debt payment, you can still reduce the balance and pay off your debt more quickly than by just making payments.
Reach your dreams
Once you’ve paid off your debt, continue to pay the final payment amount into a savings account toward a down payment or some other goal.
- Finances. We hate to put it first, but the reality is your finances are one of the main things that determines your preparedness for becoming a homeowner. Unlike renting, there's a lot more that goes into the home financing process than just your income. Banks will want to see your credit score to ensure you have a history of paying your bills on time. They'll also use your credit information to see how much debt you have and if you'll be able to take on homeowner's expenses on top of that. Another financial impact for buying a house is to determine if you can afford a downpayment. It's one thing to see that you can cover your bills with your income, but unless you have enough money saved for the downpayment (and any emergency expenses that may come up) you should wait a while and save before hopping into the market.
- What are your longterm plans? Many people are excited at the thought of home ownership to the extent that they forget their life circumstances. If you have a job that might cause you to relocate in the next 5-7 years you might want to consider renting rather than buying. Depending on factors like the price of the home, cost of living in your area, and how long you plan on living in your new home, it may be cheaper to buy or rent in the long run. There are calculators available online that will tell you which option is probably more cost-effective for you. As a general rule, however, if you plan on living in a new home for under 5-7 years, it might be cheaper to rent.
- Do you have the time and patience to be a homeowner? Owning a home means you can't call on the landlord to fix your leaks anymore. Similarly, you probably won't be able to depend on someone else to shovel snow or mow the lawn for you. It takes work to be a homeowner, and if your job has you away from home for long periods of time or working very long hours, renting might not be appropriate at this time.
- Plan for new expenses. If you can comfortably pay rent and you find out your home loan payments will be comparable, you should know that there will likely be new expenses to consider as well. Home insurance, property taxes, and expenses for things like sewer, plumbing and electrical repairs all should be taken into consideration. Additionally, you will likely have new utility bills, including electricity, water, oil, cable, and others depending on the home.