A young couple sitting on the porch swing of their home smiling and drinking a cup of coffee or tea.  She is mixed race black and Caucasian and he is African-American.

Millennials   comprise   a   large   percentage   of   first-time home buyers  purchasing  single-family  homes.    Thriving  in their  careers,  having  children  and  often  bursting  at  the seams  in  their  current  housing  situations,  millennials  are ready to make their move.

During the economic collapse of 2007, millennials ranged in age  from  middle  schoolers  to  folks  just  starting  their careers.    They  grew  up  in  the  midst  of  the  financial conversation.  As a result of this early financial education, they    learned    beneficial    lessons    surrounding    their relationship  with  money.    As  a  result,  millennials  are proving  to  be  better  savers  than  previous  generations.    A recent  study  by  Bank  of  America,  states  that  1  in  6 millennial has saved over $100,000.

You  may  have  the  funds  now,  however  you  need  to  ask yourself important questions…how long do I plan to be in this  house?    Will  I  be  transferred  or  am  I  looking  for  a career move?

The Five-Year Rule

When  you  purchase  a  house,  the  general  rule is  that  you want  to be sure you’ll be in the same location for at least five  years.  Otherwise,  you’re  probably  going  to  take  a financial hit.The  first  hit  is  your closing  costs.  Each  time  you  go through  closing —buying  and  selling —money  hits  the table.  This can easily add up to thousands of dollars, and limiting  how  often  you  have  to  pay  that  kind  of  money  is always a good idea.

And you take a second hit when you look at your mortgage statement  to  see  exactly  where  your  monthly  payments are  going.  The way  mortgages  are  structured,  you  pay much more interest in the first few years you own a house. Usually, it

isn’t  until  you’re  about  five  years  into  paying down your mortgage that you’ve made enough progress on  the  principal  to  make  it  a  better  deal  than paying  rent each month. If  you  add  in  a  couple  of  other  factors,  you  can  make buying a house that you don’t plan to stay in long-term  a better choice.

The biggest factor is how much you’re going to pay on your  mortgage.  Many  buy  as  much  house  as  they  can afford, according to what lenders offer them. That’s usually the  upper  end  of  what  you  can  financially  manage.  If, however, you buy at the lower end of what you can afford and make extra payments,you can pay off a bigger chunk of  the  principal.  You  need  to run  the  numbers  for  the specific house you’ve got your eye on, but you can often come out ahead.

You may also consider buying a house you won’t stay in for  five  years —but that you also won’t turn around and sell. Perhaps purchase a house, start paying it down, and fix it up so that you can later rent it out. You do need to be careful  to  choose  a  house  you  can  afford in  addition  to  a mortgage  for  your  next  home,even  if  you  can’t  find  a renter.  There  are  plenty  of  other  arrangements  that  can work out similarly, but you need to study up on real estate before making such a choice.

Your  United  Northern  Mortgage  Bankers,  Ltd.  licensed mortgage  loan  originator  will  be  happy  to  review  your goals  and  present  mortgage  financing  options  from  our extensive  portfolio of  mortgage  programs  to  help  you achieve your goals.  We   have   special   SONYMA   programs   for   first-time home buyers  as  well  as FHA 203k  loans which allow you  to borrow   money,   using   only   one loan,   for   both   home improvement   and   a   home purchase.      We   also   have special programs   for   community   heroes   (police,   fire fighters,  military  active  and  retired  military  personnel  and first responders) and medical residents.

We look forward to hearing from you.