Three Tips For Buying That First Home—Start With An Excellent Credit Score

Buying your first home is a big milestone—both personally and financially. Home ownership has been the ultimate accomplishment for generations of Americans. Now it’s the millennials turn to begin their home ownership experience. This generation has been through the 2008 recession and may have put off buying a home in favor of renting. So, when it’s time to make that big decision, here are three things to keep in mind:

1. Maintain an excellent credit score. Chances are you’ll be applying for a mortgage. Actually, having a mortgage to pay off can give you the opportunity to raise your credit score as long as you pay it on time. Keeping up with mortgage bills can show lenders and creditors that you’re fiscally responsible. It’s important to pay all your bills on time to maintain an excellent credit score.

2. Monitor your monthly expenses. What are your largest monthly expenses? For most people this would be their rent and automobile expenses. To reduce rent expenses, many young people move back in with their parents or get roommates to share expenses. Couples with two cars may be able to sell one car and carpool to work. Do you love going out to the movies, restaurants, or bars for entertainment? If so, you may want to curtail this activity to save money. Enjoying dinner and drinks at home, and putting off that European vacation may save you a lot of money to put towards that new home.

3. Consider buying a house in an affordable state. Buying a home in pricey states like California, New York, Connecticut, and Hawaii may take many years to save for a down payment. Saving for a 20 percent down payment in Alabama assuming Zillow’s median list price of $193,000 would take 3.2 years of savings. Saving for a home in Hawaii with a median list price of $599,000 will take you 9.8 years.

By maintaining an excellent credit score, cutting monthly expenses, and considering where you want to live, you could be well on your way to making that all-important purchase—your first home sweet home!