Avocado Toast and the Millennial Mortgage
Can you have your avocado toast and your own home too?
You’re a millennial, you’re out of school and you have the job. Now you’re looking in to adulting even further by buying your first house. Can you do it without having to give up the morning coffee at the local hip spot and the delicious avocado toast with the Trader Joe’s Everything but the Bagel seasoning lightly sprinkled on top? Yes, you can!
Pulling the down payment together
The first hurdle being a down payment. It feels daunting doesn’t it? I have a few ideas for you to collect some cash towards your down payment:
- Down payment assistance programs. I would recommend googling down payment assistance programs in the county you plan on purchasing in. Some programs are a yearlong program and they match dollar for dollar up to a certain amount. That’s free money to help you get in to your first house.
- Gifts. Money can be gifted to you by an immediate family member.
- Refinance options. Refinance your car for a longer term and pull some equity out, but be careful here. We have to keep your overall debt to income ratio in mind here. Meaning your gross income vs. your consumer and potential mortgage debt load.
- Retirement savings. Have you started your 401(k) or do you have an IRA sitting out there? You can potentially borrow against them for the purchase of your first house. Be sure to check with your tax professional before taking action.
What does it take?
You can get into a house with as little as 3% down payment of the purchase price as a first time home buyer.
The seller can contribute up to 6% of the sales price to your closing costs and escrows. We are shifting more into a buyers’ market than a sellers’ market and there’s room for negotiations with the sellers. Your realtor can help you with this.
Rent versus Buy
The average rent in Portland is $1,828 a month according to Rent Jungle. What would $1,828 buy you? It would buy you a $280,000 house with a 3% down payment of $8,400 and a loan amount of $271,600. In all, your house payment of principal, interest, taxes, insurance, and mortgage insurance would be about $1,828 a month.
Speaking of avocado toast – my toaster is calling me.
Want to learn more about the mortgage process? Come to our upcoming workshop! Register here. Ready to have your avocado toast and be a millennial homeowner? Click here to get started working with our mortgage team.
By Annelle Friel, Mortgage Loan Originator, NMLS# 1371269