After college, many recent grads move back in with their parents while they search for jobs and begin their new careers. As parents, we all love our kids but if you’ve already got a plan to convert the kid space in your home to adult space, you may want some tips on how to help your college grad leave the nest.
Help them save money, pay off debt, and find affordable financing
Living at home is a huge cost savings for your child. Encourage your child to make a budget, and apply the money they save from rent towards paying off any debt or student loans they may have, as well as saving for a down payment on a home of their own. As they prepare to purchase, other costs they should consider are closing costs, moving costs and costs to furnish the new home. So saving up for these expenses is important. When searching for financing options, there are 100% financing programs available. Lenders will allow you to gift down payment funds to your child starting with just 3% for a conventional loan or 3.5% for an FHA loan.
Help them establish credit
Borrowers should have at least three lines of good credit. In order to extend credit to buy a home, most lenders want to see at least three open and active tradelines. Tradelines are items that will report onto your credit report such as a credit card, student loan or car loan. Items that do not count as tradelines are things like utility bills or phone bills. Although utility and phone bills do not show up as tradelines on your credit report, not paying them can negatively impact your credit score because they will show up as an outstanding delinquency on your credit report. The minimum credit score to purchase a home can be as low as 580 on an FHA loan, but for the most favorable terms aim for a credit score of 760 or better.
Save that job offer letter
Throughout your child’s life you probably saved a ton of school pictures and art projects. After graduation, make sure to save their college transcript and their job offer letter too. Lenders typically want to see a two-year work history when reviewing a loan application, but did you know a college transcript may count towards a person’s work history? If your current job is a direct correlation to your major in college, then your college transcripts may be accepted in lieu of a work history. Depending on your loan type, your lender may ask for your college transcript, your offer letter, and a paystub showing at least 30 days of employment.
At Ameris Bank we understand that buying your first home is a big step. Whenever you and your child decide it’s the right time to leave the nest, an Ameris Bank mortgage banker will be there to help you find the right mortgage option to fit your needs.
By: Marlene Sheard
Marlene is the mortgage marketing representative for Ameris Bank and previous sales and marketing president for her local Home Builders Association. She enjoys sharing her experiences for the buying, selling, and financing of homes.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.