How Millennials Can Save Up For A Down Payment
Millennials, those born between 1980 and the early 2000s, have had a harder time than previous generations saving up for a down payment for a home. This is because there are high unemployment rates and most of them have large amounts of student loans to pay off. It may take longer to purchase a home as a Millennial but it’s not impossible. It just takes a little more planning and time. Here are some things you can do to save up for a down payment for a house.
- Move Somewhere Cheaper
- Live With Your Parents
- Get a Second Job
- Budget Wisely
- Pay Off Your Loans
- Work on Your Credit
Yes, California is beautiful, but it’s expensive. Even in the San Joaquin Valley, prices are much higher than other states. The easiest places for Millennials to save for a house are Iowa, Indiana, Arkansas, Ohio, and West Virginia. Even if you don’t want to buy a house in one of those states, it might help to move to a different state for a while where the rent prices are cheaper. That way you can pay off student loans and start saving for a house much faster than if you stayed in California. On average, it takes 9.8 years to save for a 20% down payment on a house in California. In the easy-to-save states, it takes an average of 2.6 years to save for a 20% down payment in that area.
If it’s an option, you may want to consider living with your parents for a few more years. It’s no fun having to move back in with your parents, but it can help speed up the process of owning a home. Your parents will probably charge less rent for you to live there than in a real apartment complex or home, or if you’re lucky, not charge you anything.
It may not be ideal, but a second job’s income could possibly go entirely to your savings. Give up your free time for a few years to secure your savings.
If you spend a good chunk of your money going out with friends, then it may be time to cut back and budget. Set a strict budget on how much you can spend having fun and leave it at that. Avoid going out to eat and grocery shop and cook instead.
The amount of debt you have affects whether or not you can buy a house. So paying off your debt before you buy a house is a smart move. Not only will you be more likely to be approved for a home loan, but then you won’t have your loan payments and your mortgage payment to pay for.
If you have bad credit, it’s time to fix it. There are programs for mortgage loans for those with bad credit but the interest rates are higher. Pay off your credit cards and only spend what money you actually have. Always pay the full balance on your credit card statements and pay them on time so it doesn’t get out of control.
If you apply all of these practices to your life, then you’ll have enough for a down payment in no time!