The Four D’s of Landing a Mortgage as a Millennial
Congratulations! You are, at least in some capacity, are considering buying a home. Now all you have to do is make sure that you qualify for a mortgage. And you really need to make sure you can qualify. Although filing for the “death pledge” might seem intimidating, but it’s completely feasible if you follow the right steps. Fortunately, resources and knowledge regarding mortgages have grown more and more available. Take for instance, this blog. Below are what I consider the 4 D’s of Landing a Millennial mortgage.
Tax questions? Some Ways to Score More on Your Tax Refunds
Do the Math
Okay. There’s a lot of math to do in purchasing a new house but there are a few thing in particular to consider.
- Do you really want to buy?
- Do you want to go for the down payment?
- Do you know your buying power?
Buying a house is [spoiler alert] a big deal. Are you sure this is what you want to do? I encourage it. It’s an exciting step. Just keep in mind that although buying a house can be a longterm investment, it’s more than anything going to be a weight off your shoulders. No more owing rent to landlords. No more checking in with your landlords if you want to paint the kitchen walls. Finally a piece of land that you can call your own. But all that considered, do you have money for a down payment? It doesn’t have to be huge. Some loans will let you swing in the 3–5% range. Then the next question is, do you have a little bit of money for emergency repairs? Make sure you have a little trove of “just in case” money. And do yourself a favor: know your buying power.
Double-check Your Credit Score
If you don’t have a credit card, get one. Quick. It’s a simple way to build up a great credit score, and lenders love seeing a good credit score. Plus, with all of the benefits of cards out there, having a credit card is like having free money. Of course, not all lenders have the same taste in credit scores. Make sure that your credit score works for with whatever lender you’re looking into. While you’re at it, also take into consideration the other things lenders might look into e.g. payment history, collections, and the other types of accounts you have in your portfolio.
Documentation, Documentation, Documentation
Know what sort of documentation you need. This includes W2’s, tax returns from (from several years back), bank statements for the last two months, pay stubs for the last 30 days, and more. The last thing you want to do is show up unprepared.
Bonus: It helps if you’ve been working at the same company for at least two years at a company. It doesn’t have to be the company that you’re at now. Lenders like to see that you’re the kind of person who can commit.
Don’t Forget Closing Costs
Credit checks, home inspections, homeowner’s insurance, prepaid interest, and mortgage insurance don’t just grow on trees. After all of the other saving that you’ve done for the above, make sure that you save enough money for the closing cost. Chances are you can talk the seller of the home you’re fixing to buy to pay some if not most of your closing costs. Alternatively, you can just include the closing cost into your mortgage by going with a steeper interest rate.
Bottom line: You have choices. Make sure you’re looking at how you close from multiple angles.
If you’re looking for additional mortgage insights, I can’t recommend enough reading anything by Shikma Rubin.
