Tips for Purchasing A Home After Graduation

So you have completed three or more years of university and have finally graduated. Even better, you have landed your first job and now have a regular source of income.

Congratulations! Graduating from college and being independent is a rewarding experience. If you are ready to strike out on your own, you might consider buying a condo or a house soon. However, before you proceed on your homeownership journey, you must consider the costs and understand how to manage your finances.

Here are the essential steps to take if you want to buy a home after graduation.

Your credit score will directly impact how much you can borrow and whether you can qualify for a home, so you should begin building good credit as soon as possible. Here are some suggestions:

Using a credit card intelligently (by using it only a little each month and paying off your balance in full and on time each month) is an excellent way to build up credit fast.

Take care not to overspend on credit cards. This is easy to do, so make it a habit to pay with cash for most of your purchases.

You may be flooded with credit card offers as a recent graduate. Take the time to find a dependable credit card with a low limit, low-interest rate, and from a reputable lender. Check with your bank to see if they can provide you with a better deal.

Stick to one or two credit cards until you are accustomed to your new job and living expenses. Credit cards carry the risk of debt, so never charge more to your credit card than you can afford to pay back.

Keep a calendar of your bill due dates and pay them on time and in full. You must also keep a budget and stick to it each month as late payments are not an option if you want to improve your credit rating.

However, if you are late with your monthly payments for any reason, make sure to settle them within 30 days. If it helps, you can move some payment due dates to a more convenient time of the month.

Further, setting up online auto pay may be the best way to ensure on-time payments — and a higher credit score!

The ratio of the amount owed to the amount of credit available is an important factor affecting your credit score. Maintaining a credit utilization of 30% will help you keep your debts to a minimum. You must use your credit to have it count towards your score, but you must pay it off monthly to grow your credit wisely.

Payments on student loans begin six to nine months after graduation. Your monthly payment could be more than two hundred dollars, depending on how much you owe.

If you repay them on time after graduation, they can help you build your credit history. But, whatever you do, do not allow your student loan to default as even one late payment can hurt your credit score and lead to financial difficulties.

If you are not able to make your minimum payment, speak with your student loan provider about hardship provisions. You may be eligible for deferment or forbearance if you have a federal loan. Both options can temporarily lower your payment or suspend it for a set number of months.

Even if you are willing to put off buying a home until your credit improves, you may be eager to rent an apartment.

Renting can help you prepare for homeownership. However, if you have accumulated significant debt while in college, it may be preferable to live with your parents for some time to save money and pay off debt.

Your credit score will improve if you can pay off credit card debt or significantly reduce your student loan balance. Furthermore, lower debt payments translate into more disposable income.

It is also critical to monitor your credit report as you prepare for homeownership. It only takes one negative error to lower your credit score and make qualifying for a home loan difficult.

You can get a copy of your credit report from all three credit bureaus once a year. You could also go to AnnualCreditReport.com or Credit Karma to request a free copy. If there are any negative remarks you should address them immediately. By checking your credit report you can also determine your current standing and take appropriate steps to improve your score.

Money is required to purchase anything. This is especially true when investing in a big purchase like a home. When you start earning your own money, you should consider opening a separate bank account to act as a “savings account.” You can choose to automatically transfer a portion of your monthly paycheck into this account. You can also choose not to link your ATM or credit card to this account. In this way, your savings will be untouched.

Setting up a budget and living within your means is also advantageous. You do not have to make ramen your go-to meal, but you should be thrifty. Reduce your spending on restaurants, movies, and other non-essentials.

Your dream home might be a sprawling residential property with enough yard space to grow your vegetables or keep a pet. But it is important to start with a smaller home that you can afford, especially when you have just graduated and have significant student debts to pay off. The good news is that without children, you do not need extra space or world-class schools.

Buying a home is one of life’s biggest investments. The sooner you become a homeowner, the sooner you can build equity and move to a larger or better home in the future. Ratebeat Mortgage is dedicated to helping first-time home buyers to purchase their dream homes. Call our experts today to assist you to locate the best mortgage program tailored for your needs.