Individuals who fall into the millennial demographic have been long discussed on if they are the generation continuing in the path of their parents and grandparents or straying away from the typical “norm” of a traditional lifestyle.
This lifestyle, more importantly, includes buying a home and obtaining a mortgage. What many Kansas City millennials today are not aware of is how ready they truly are for including a mortgage into their financial being; they aren’t as far off as they might think.
What does it mean to be “Mortgage Ready”?
A consumer is generally considered mortgage ready if, “he or she is 40 or younger and does not have a mortgage but has the credit characteristics to qualify for a mortgage.”
The current minimum requirements for an FHA-approved mortgage:
- At least 3.5% down payment
- Credit score of at least 580
- Debt-to-income ratio front-end of 31% and back-end of 43%
- Steadily employed for at least 2 years
This being said, it’s important to do your research before considering yourself ready for a mortgage.
Millennials have proven in recent past years that they have taken longer to complete conventional milestone patterns.
Although, according to a 2019 study done by the National Association of Realtors, millennials actually make up the largest share of homebuyers at 37 percent. This could have to do with the generation of individuals growing older and finding themselves comfortable enough to take on a mortgage.
It seems that the stigma that this particular generation has been circling around is finally fizzling out.
How to Prepare
Most millennials today who feel like they don’t fall into the category of feeling mortgage-ready might say they don’t think they have the credit score to financially take on such a large responsibility or to even qualify for a mortgage in general.
Improving your credit score is not an overnight task, but with time has the ability to be altered so you are able to purchase the home of your dreams.
Get Organized and Informed
It’s important to be aware of your current status and areas you can improve on. Having access to all your information in an organized manner will not only help you consider all your options, but it will make it easier to plan for the future.
Having an idea of where you are financially and where you would like to end up is vital in improving your credit score. Planning out finances for the future and executing them will help you to budget your priorities and knock out unnecessary payments.
Make Payments on Time
One can only go so far in improving credit without eliminating credit card debt and making payments in a timely manner. These are crucial steps that you must engage in immediately to help your credit score. Getting rid of debt will not only feel great, but it will help future habits of spending and payments.
If you feel like you are mortgage ready or wanting to get there, contact us today. We are here to help.