How to Approach Buying a Home as a Recent College Graduate
Save Money in the Long Run
Owning a home means saving more money over time. In some cases, the cost of a monthly mortgage payment may be less than the cost of rent payment. You won’t need to rent extra storage space or fight for a parking space in your own home, either.
You won’t have to deal with payday loans in Waycross GA increased rent payments, as well. A landlord can ratchet up rental payments whenever they want to. But with a mortgage, you’ll have a clearer sense of your financial picture in the months ahead.
Gain Tax Deductions
Once you graduate into the real world and land a job, you’ll have to pay taxes. A big benefit of owning a home is that you can deduct mortgage interest when filling out your returns.
In your first year of homeownership, you may be able to deduct portions of the closing costs, too. Feel free to claim origination fees, which are included in closing costs. And for one more benefit, you can deduct your property taxes.
When you’re hoping to buy a home, you need to start with a clear budget. Look at your monthly paycheck and develop a system where you can maximize savings! Whether you’re graduating from a local university or one in a different state a lot of the fundamentals of buying a home are the same anywhere you love. Many folks find themselves relocating after school so you’ll want to be sure to find a great place to live.
Hammer Out a Budget
Planning a budget means finding a way to live within your means. Consider using an app or spreadsheet to track your expenses each month. Account for utilities, rent or mortgage payments, membership fees, cable, student loans, and more.
Aim to limit 30% of your gross income to housing costs. In other words, if you’re taking in $3,000 per month from work, keep your rent or mortgage under $1,000 per month.
Make a Plan to Put Money in Savings
When you’re fresh out of college, it ily or a roommate for a while to build up savings. When you don’t have to pay rent or a mortgage, you can pocket a lot more of your paycheck. If you’re wondering how to save money for a downpayment start by reading this.
You don’t have to make ramen your go-to meal, but do be frugal. Limit your spending on restaurants, movies, and other non-essential activities.
Ask Family Members for Help
The down payment can be the biggest hurdle when you’re buying a home as a recent college graduate. You may not have tens of thousands of dollars sitting in your savings account. And you won’t have profited from the sale of a previous home.
Consider turning to your family for help with a down payment. Your parents may be willing to give you money. If you go this route, you’ll need to work with your lender to verify a few things first.
Your lender will need proof of the relationship. They’ll also need a gift letter confirming your parents’ intent to give you the money. In addition, your lender may want to see a banknote or other indication of the money’s source.
Understand the Role of Your Credit Score
When you decide to pursue homeownership, you’ll have an easier time with a better credit score. Lenders will look at your credit score when they determine a loan amount. There are ways to boost your score before you start talking with lenders.
What Is a Credit Score?
A credit score is a number ranging from 300 to 850 that will give someone a sense of your creditworthiness. The higher the number, the better the score.