Rejection is tough. Especially when it’s something you put effort into achieving. Millennials are no strangers to this feeling.
Denied mortgage applications are just as difficult. After all, isn’t having a home of your own part of the American dream?
Breaking down the factorsthat get a loan rejected are credit score issues, problems in property valuation and, the number one reason? High debt-to-income (DTI) ratio.
But in recent news, Fannie Mae announces its move that could significantly simmer down the rising number of rejected loan applications by tapping into the factor that leads to it.
From its current 45 percent ceiling, the country’s biggest source of mortgage financing moves it up to a 50 percent threshold. And since lenders are more than welcome to this change, it opens up the possibility of homeownership to more people.
The Millennial Market
In the real estate market, a lot of attention is focused on where the population weighs the heaviest: millennials. And for a populace that’s 81 million strong, this generation are seeking for stability more than most people think. Contrary to the common perception, they find owning a homejust as appealing as previous ones.
But in a studyfrom the National Financial Capability Study (NFCS) in 2012, a significant number of millennials struggle with debt. It could be from student loans, car payments, credit cards and, the like. Since this could put a stretch on your DTI ratio, getting a loan would definitely be difficult.
But then there’s hope. Other than Fannie Mae’s change in financial standards for loan applicants, you can definitely make smarter choices to further ease down your debts.
A change in lifestyle could significantly help through simple choices like curbing your spending habits.
If you live in a city, it could be smarter to rely on public transportation for now than getting a car. Lowering your phone plan could also be another move you can do. If you don’t usually use up your allocated data and only rely on your phone for important matters, maybe it’s time for you to change into a doable and affordable alternative.
Spending more money on the things you need and lesser on the things you just want is something you can be thanking yourself for in the future.
Make Way For More Income
If you keep a steady job and still have time on your hands, you could immerse yourself on a side hustle. It could be anything from freelance jobs, selling goods, tutoring and much more.
And if your current job takes up more time and adding up extra work would be too much, maybe it’s nice to look into performance bonuses, incentives, rewards or even promotion.
This way the more income you put in for yourself the more money you could save for that home you always wanted to have for your own.
In the end, it would seem that it’s easier for all of this to be said than done. But then, it’s also undeniable that if you set a goal for yourself, the next best move is to start doing it.Click to See the Latest Mortgage Rates»