Planning ahead is the first rule of finance. Here are a few tips on how students can plan to buy a first home after graduation. For some people, it is wise to rent, and for others, it is wise to purchase. The key is having the power to do what is smartest when it comes to homeownership.
For certain, homeownership is not for everybody. Buying a home is a huge obligation. If you don’t make the payments every month, the bank will end up owning a new piece of property. But it’s always good to have the power to make the choice between buying a home and renting.
Here are some steps students can take to help improve their buying power.
Establishing a credit record and building your score is the number one thing students need to do. Your credit score is partly based on time, so it is wise to begin early. Plus, when you’re in college, you have a little leeway.
According to interest rate portal Bankrate.com, college students are offered credit cards based on more flexible standards than are non-students (although student cards tend to carry heavy restrictions). Building your credit score is key to obtaining a mortgage someday. College is the perfect time to get this started.
The mortgage process is one of the most complicated financial transactions anyone will ever go through. Just go to a bookstore and visit all the aisles dedicated to home buying. It takes a lot of time to learn all of the different types of mortgages and who the key players are in the borrowing process. Start learning now about adjustable rates, fixed rates, piggyback loans, mortgage brokers and how to get pre-approved.
Get that savings account or brokerage account moving. Start paying yourself once in a while. What that means is, before you pay the electric bill and the water bill, pay your savings account. Take $25 out of your check and put it away. You are going to need cash for all kinds of things once you graduate, so a savings account can’t hurt. Also, start crunching numbers so you can establish goals. By figuring out in advance what you will likely need, you can create savings plans and set milestones.
According to real estate commentator Ilyse Glink (thinkglink.com), most homeowners move every five to seven years. Take this fact into consideration when you make plans for your mortgage, where you might want to live, how big of a home you think you need and who is going to be living in that home with you. And don’t forget about the kid factor a lot can change in that five to seven years.