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Mortgages and Millennials: Tips for Today’s Young Buyers

Taking on the responsibility of owning a home is not a decision to be entered into lightly, but that doesn’t mean young buyers should shy away from the American dream. Contrary to much of the media hype around Millennials – a term typically used to describe those aged 18-34 – many are gainfully employed, starting families and thinking about purchasing a home.

The following tips may help young buyers avoid bumps in the road and pave the way to happy home ownership.

Illustrate a pattern of stability

Millennials tend to move a lot. New jobs, new cities and new apartments are par for the course for this generation. Still, prospective mortgage lenders are looking for signs of stability that indicate less risk. One of the best ways to establish a pattern of stability, even through a series of job changes and moves, is to remain loyal to one bank over time. With the advent of so many online banking tools, this is easy to do even when moving to an area without a physical branch. Aim for keeping a checking or savings account with the same institution for at least five years.

Address errors in your credit report

Many young people don’t have lengthy credit histories yet, but that doesn’t mean errors – large or small – aren’t hurting a Millennial’s chances at getting pre-approved for a mortgage loan. Anyone can check their credit report for free once per year through the three major credit reporting agencies, but many banks, credit cards and independent services also offer monthly access. Keeping a close eye from month to month means any errors can be quickly caught and addressed.

Resist the urge to take on credit card debt

These days, some debts are simply unavoidable. A vast majority of young people are carrying student loan debt and, often, paying on an auto loan as well. Mortgage lenders expect this and won’t typically hold it against a loan applicant. However, mortgage lenders do evaluate an applicant’s debt-to-income ratio, so it’s important to avoid any extra debts, especially of the credit card variety. Paying down as much debt as possible – especially high-interest debt – will help smooth the way for mortgage approval.

Image via Flickr/Nerissa Dela Cruz

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