Millennials now is the time to get started
Credit scores are an important part of the home buying process. As a matter of fact before you even begin to search for a home, the first thing you should do is talk to a mortgage broker. They can review your credit score and let you know what price range you qualify for, which will then shorten your list of homes to look at. No more looking at $500,000 homes when your budget is $300,000. This will give you a good reality check when it comes to your expectations of your future new home. They can also help you work on improving your score. And you can then become prequalified for a mortgage and that makes you a strong buyer, putting you in a better deal making position than others.
According to a survey by Transunion just completed, a third of millennials (ages 18 to 34) plan on buying a home in the next year but more than 40% of them do not have a credit score good enough to make this happen. Transunion survey found that 32% say they plan on buying a home within the next 12 months 43% of them have subprime credit.
This is exactly why a home buyers first stop should be to a mortgage broker, well in advance. It can save you both time and money in lower interest payments. Having subprime credit ensures that you will face financial barriers to homeownership and any other big ticket purchase you might be thinking about.
In contrast the survey found older consumers who plan on buying a home are more aware of their financial standing. 17% of age group 35 to 54 said that plan on buying in the next year have super prime credit score.
Here are some tips offered by Senior Vice President Ken Chaplin of Transunion for millennials.
1. Check your credit report early on.
Transunion recommends checking your credit report 3 months in advance, I would add even more time if you have dings on your credit. These need to come off before you apply.
2. Build credit
Millennials with very little credit history should start working on improving this . Pay your bills on time. Maintain a low credit utilization ratio which is how much credit you use out of your credit limit. Make sure your loan payments are on your credit report. Use your credit carefully and make sure you pay it back. Don’t fall into the trap of not paying your bills. An most important no big ticket items on your credit cards. That alone could kill a loan.
3. Do your homework.
Interest rates vary between lenders. Shop around and watch all those buried fees.
4. Start planning early
Watch your credit score and track how your spending affects it. That goes for adding or removing a credit card from your name. One of the credit card companies even sends you your score on the monthly statement. I cancelled a credit card and was very surprised when my score dropped.
5. Set realistic goals
Putting more money down will lower your monthly payments but remember you always need to hang on to cash, don’t use it all. You will also need to come to the closing table with closing costs. Sometimes you can roll those costs into the mortgage, but that makes for a higher monthly payment.
6. Keep an open mind
You need time to save money for a down payment and build your credit. Start early and stay on top of the entire process
For more information about Transunion visit there website.