Graduate College. Get a Job. Start Saving for a House?
In college you were literally counting your pennies to see if you could afford to go out that night. So now you have your first job you’re feeling pretty rich. Like, Zuckerburg rich. But before you start letting your newfound income go to your head, make sure you’re planning for your future. Yeah, it’s true. You might live in the city your whole life and never buy a house. But ten years from now, you might change your mind.
If you have a bigger down payment when you’re ready to buy a house means you’ll have a better chance of getting approved, lower monthly payments, and less chance you’ll need private mortgage insurance. When you get a bonus or a raise, make sure you add something to your savings account.
Don’t abuse your credit card
When you do apply for a mortgage, your lender is going to look at your debt-to-income ratio. It’s pretty much exactly what it sounds like. They’re going to look at how much money you owe compared to how much money you make. So even if you’re making a lot of money, you might not get approved if you’re racking up a bunch of credit card debt.
Pay your student loans on time
It’s universally accepted that student loans are pretty much the worst. But if you’re paying them on time every month it’s going to help you do two things. One, you’ll lower your debt-to-income ratio. And two, you’ll help out your credit score. And that’ll show lenders that you have a history of paying your debts on time (which makes them feel much better about lending you hundreds of thousands of dollars).
Keep up with interest rates
We’re not saying check them every day. But at least become vaguely aware of what interest rates are and how they’re changing. When you think you are ready to buy, knowing the interest rate and what it’s done recently will help you decide if now’s the right time or if you should wait. It’ll also help you understand how your interest rates can change over time if you’re thinking about getting an adjustable-rate mortgage.
If you start doing these things now, you’ll be in better shape when you decide you want to buy a house (or a condo or an apartment). Even if you decide homeownership isn’t for you, it still won’t hurt to be financially healthier.