Posted by Mary-Lou McDonough on 1/6/2020

For most college students and recent grads, the prospect of buying a home seems slim and distant. With the cost of a college education growing each year and the price of houses inflating, it can seem daunting to begin to save for a down payment or build credit.

 However, there are ways to start planning now for buying a home, even if you are burdened with student debt and rising rent.

 In this article, we’re going to do just that. If you’re a recent grad or a current college student, read on for a guide to buying a home.

What do you need to buy a home

Once you graduate college you might be wishing you could have taken an elective called “How to Be an Adult 101.” There are many personal finance problems in life that just aren’t taught in school, from saving for retirement, to borrowing for a house or car, to investing in stocks and bonds.

So, what are the main things you’ll need to buy a home? Before you start applying for mortgages, you should know that just because you can get approved doesn’t mean you should buy a home.

Purchasing a home is a huge investment and one that most homeowners take decades to pay off. With high interest rates and private mortgage insurance (PMI), the cost of owning a home can be immense.

To avoid PMI and get a good interest rate, you’ll need a few things.

Credit score

Your credit score is one thing that lenders take into consideration when determining how risky it is to lend to you. They want to know that they’ll receive a return on their investment and that you won’t stop paying your mortgage. A good way to gauge this is by looking at your financial history.

Your credit score mainly takes into account the following five things:

  1. Payment history - 35%: Do you pay your bills (utilities, loans, etc.) on time each month?

  2. Credit usage - 30%: How much of your maximum credit have you used? If you max out your cards this can reflect poorly on your ability to manage money. However, if you don’t use any accounts you might have a hard time building a payment history.

  3. Length of credit history - 15%: The longer you’ve been paying bills the more trustworthy you are to lenders

  4. New credit - 10%: If you recently opened or attempted to open cards this will temporarily lower your credit score as it could be a sign of financial duress

  5. Types of credit - 10%: store accounts, credit cards, loans, etc. Having a variety of credit types will boost your score.

Having student loans as a college graduate can often give your credit score a leg up on others who don’t have a credit history. However, to boost your score you’ll want to keep making on-time payments and consider using a credit card if you can afford it.

Employment history

Most recent college grads cringe when they hear that their employment history is important to lenders. However, you might be pleased to know that being a full-time student is something lenders take into consideration.

They will, however, need to see employment history from your current employer, and the more you can prove that you have a stable job the better.

Down payment

One of the most important things you can do right now is to save for a down payment. Designate a portion of your paycheck each week to a separate savings account if you need to in order to hold yourself accountable. The bigger down payment you can make, the better your interest rate and the more money you’ll save over the length of your mortgage.

Finally, don’t let increases in your salary change your lifestyle. Staying frugal will help you avoid “lifestyle inflation” or spending more simply because you make more. Decide what you value, and choose purchases wisely.

Tags: College   home buying  
Categories: Uncategorized  

Posted by Mary-Lou McDonough on 7/6/2015

In every aspect of human life, planning is necessary, this certainly applies to preparing for college.  Your final years in high school are the best time to plan and explore the possibilities ahead of you. During this time ask yourself important questions like where do you see yourself in 4 years, and what type of career would best fit your lifestyle. Be sincere in your answers as planning your future should be based on your true desire and passion. Consulting with a guidance counselor can prove to be helpful when choosing the best path to follow. It goes with out question that maintaining excellent grades in high school is very important.  By the end of October, you should have registered for PSAT/NMSQT testing. This will assist you in gaining the knowledge required for SAT 1 and SAT II  This test will also qualify you for the National Merit Scholarship Competition. General preparation tips for college: Selecting a School:

  • With so many colleges around, you have a wide variety to choose from. This starts by attending college fairs and doing your research. Visit some campuses and find the one that appeals to you the most. Do research online, and talk with past and present students from colleges that you find interesting.   This type of research should give you a general feel for each college.
Career Selection:
  • This is even more important than the choice of school. Generally, it is recommended you go for a career that naturally appeals to you.  However, consulting a guidance counselor may provide you with options that you had not considered.
Preparing Your Resume: Prepare a resume that highlights your personality outside of school. The college is already familiar with your academic excellence; they want to know your abilities and accomplishments beyond that.   Be sure to include the following areas below.
  • Community Activities
  • Community Service
  • Work Experience
  • Award and Recognition
  • Sports and Hobbies
Recommendation for Parents: Some parents wonder if they have any say in their child's decision on which college to attend.  The truth is, most students are looking for their parent's input and respect their advise.  Parents should be supportive and respectful of their child's interests and help guide them to the school that best meets their academic needs.
  • Show parental support for their quest to get a college education.
  • Attend presentations and seminars with them. Also attend as many college tours as you can.
  • Explore the internet with your child and assist with their research.
Planning for college should  begin early. Students need to assume the responsibility of achieving academic excellence throughout their entire educational experience.  The parents role is to ensure their child stays on tack through continual support and guidance.