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Each generation faces unique challenges when attempting to buy their own home.

The differences between each generation become more evident with each passing year. Early-career home buyers tend to be light on cash, while mid-career home buyers are saving for retirement. Meanwhile, retiree home buyers are facing less income. Each of these significant stages of life presents different considerations and solutions when looking to secure a mortgage for their new home. To help you make smart decisions, whatever your generation, here are the basic strategies.

General Planning

There are three main points to consider when mortgage planning:

1. Get enough cash to close. Many home loans require a down payment, which can range from 3 to 20 percent of a home’s purchase price.
2. Determine your monthly cost. Owning a home has more financial requirements than renting a space. Calculate your costs to determine your desired monthly mortgage budget and your maximum budget.

Millennials: Find the Down Payment First

Millennial home buyers haven’t been in the workforce that long, so cash required to close on a home is often the primary challenge for them. If a young buyer hasn’t saved at least 20 percent of the home’s value, he or she may face the extra costs of a second mortgage or mortgage insurance. An obvious solution to this challenge is to wait until more funds are saved, at least 20 percent, or find a property where you can pay a lower down payment. Costs should be carefully calculated and considered, especially for those younger buyers who are eager to become a homeowner but haven’t been in the workforce long enough to earn the necessary down payment.

Generation X-ers: Balance Spending and Saving

In an ideal world, our spending and savings budgets would be equal every month. Many Generation X home buyers are mid-career, and monthly costs are their primary consideration. After all, saving for retirement and kids’ college education costs a pretty penny. Even so, there are certain bills that come along with a home: utilities, maintenance, insurance, property taxes, and more. For those Generation X-ers who want to save more money every month, it’s worth talking to mortgage and financial advisors who can run different payment scenarios. If balancing monthly costs and cash preservation is key, perhaps putting more money down can help save money with a lower payment every month.

Baby Boomers: Save Where You Can

For those who are in their late-career or retirement, living on less income may be your primary consideration. If you’re a Baby Boomer with equity in your home but less income-generation savings than what you had planned for, you have a few options.

• Get a reverse mortgage. This allows you to ‘cash in’ some equity on your home for immediate funds for daily living expenses.
• Get a home equity loan to obtain cash from your home.
• Sell your home.

Like any other major financial decision, some planning, calculating, and advice from experts never goes amiss. To get started on your home search, visit your local expert! Contact Jenn Blake Real Estate Group at Pacific Sotheby’s International Realty in San Diego, California at 858-663-6788.