Buying a Home As a Recent College Grad

For most college students and recent grads, the prospect of buying a home seems slim and distant. With the cost of a college education growing each year and the price of houses inflating, it can seem daunting to begin to save for a down payment or build credit.

 However, there are ways to start planning now for buying a home, even if you are burdened with student debt and rising rent.

 In this article, we’re going to do just that. If you’re a recent grad or a current college student, read on for a guide to buying a home.

What do you need to buy a home

Once you graduate college you might be wishing you could have taken an elective called “How to Be an Adult 101.” There are many personal finance problems in life that just aren’t taught in school, from saving for retirement, to borrowing for a house or car, to investing in stocks and bonds.

So, what are the main things you’ll need to buy a home? Before you start applying for mortgages, you should know that just because you can get approved doesn’t mean you should buy a home.

Purchasing a home is a huge investment and one that most homeowners take decades to pay off. With high interest rates and private mortgage insurance (PMI), the cost of owning a home can be immense.

To avoid PMI and get a good interest rate, you’ll need a few things.

Credit score

Your credit score is one thing that lenders take into consideration when determining how risky it is to lend to you. They want to know that they’ll receive a return on their investment and that you won’t stop paying your mortgage. A good way to gauge this is by looking at your financial history.

Your credit score mainly takes into account the following five things:

  1. Payment history – 35%: Do you pay your bills (utilities, loans, etc.) on time each month?

  2. Credit usage – 30%: How much of your maximum credit have you used? If you max out your cards this can reflect poorly on your ability to manage money. However, if you don’t use any accounts you might have a hard time building a payment history.

  3. Length of credit history – 15%: The longer you’ve been paying bills the more trustworthy you are to lenders

  4. New credit – 10%: If you recently opened or attempted to open cards this will temporarily lower your credit score as it could be a sign of financial duress

  5. Types of credit – 10%: store accounts, credit cards, loans, etc. Having a variety of credit types will boost your score.

Having student loans as a college graduate can often give your credit score a leg up on others who don’t have a credit history. However, to boost your score you’ll want to keep making on-time payments and consider using a credit card if you can afford it.

Employment history

Most recent college grads cringe when they hear that their employment history is important to lenders. However, you might be pleased to know that being a full-time student is something lenders take into consideration.

They will, however, need to see employment history from your current employer, and the more you can prove that you have a stable job the better.

Down payment

One of the most important things you can do right now is to save for a down payment. Designate a portion of your paycheck each week to a separate savings account if you need to in order to hold yourself accountable. The bigger down payment you can make, the better your interest rate and the more money you’ll save over the length of your mortgage.

Finally, don’t let increases in your salary change your lifestyle. Staying frugal will help you avoid “lifestyle inflation” or spending more simply because you make more. Decide what you value, and choose purchases wisely.

Multi-Family – 88-90 Phillips Ave Springfield, MA 01119 now has a new price of $149,900!

Perfect investment or owner occupied opportunity with this 8 rm 4 bed 2 full bath ranch style duplex building~~ Recent roof within 5 years~~Both sides have plenty of open space in the basement for storage as well as laundry area~~Electric heat means no furnaces to maintain or replace!!~~ Property is well maintained and located in an area of many amenities~~

This property features 8 total rooms, 2 full baths, 4 bedrooms, 0.13 Acres, and is currently available for $149,900.

For complete details click here.

Single-Family – 31 Saratoga Dr Worcester, MA 01606 is now under agreement!

This fantastic Ranch is ready for it’s new owner!! Just move right in and start enjoying all this home has to offer from the cozy den overlooking the private fenced in back yard to the large living/dining room area complete with new Jotul wood stove!! House is wired for a back up generator~~Hardwoods throughout~~Updated windows~~Updated kitchen with granite and recent flooring as well as recent kitchen appliances.Recent updates to bath include counter-top sink, back splash and flooring. The walk out basement has a 200 sq ft finished room but can easily be expanded! over 11,000 sq ft lot!! Great commuting location on the Worcester/ Holden line!! Showings begin at the Open House Sunday 7/9/17 12-1:30pm !!

This is a Ranch style home and features 6 total rooms, 1 full bath, 1 half bath, 3 bedrooms, 0.26 Acres, and is currently available for $269,900.

For complete details click here.