The Housing Scene by Lew Sichelman

Rookie Homebuyers: Get Informed

Millennials are graduating from college with the greatest amount of student debt of any generation. As a result, those who wish to buy a home now, rather than wait until they can truly afford it, are likely to turn to their parents for financial support.

That's not a terrible scenario. After all, mortgage rates, still relatively low, are destined to rise soon, and house prices aren't going to go any lower.

But one voice in the wilderness suggests that millennials -- those born between the early 1980s and the early 2000s -- might be better off waiting until they can afford to buy independently.

Is this real estate heresy? Not necessarily. Ray Brousseau, an executive vice president with Carrington Mortgage Services, says he'd just rather see buyers be prepared for ownership instead of getting in over their heads.

"My message is not necessarily to wait, it's to be informed -- to be educated about what they are doing," Brousseau says. "If they can (buy) quickly, fine ... But if you are not knowledgeable about the buying process and what ownership entails, you might be better off waiting until you are."

The 26-year industry veteran's advice doesn't only hold true for the country's 83 million millennials. It makes sense for first-time buyers of all ages, whether they need monetary help or not.

Here's how to become an educated first-time buyer:

-- Research. Brousseau suggests that, before shopping for a house, rookie buyers spend three to six months talking with a variety of real estate and lending professionals and becoming as informed as possible. Also, take advantage of the numerous tools available online.

-- Resources. Build a team of advisers. Certainly this group could include Mom and Dad, especially if they are homeowners -- and especially if they will be financially helping you join the ownership ranks sooner rather than later.

At the same time, realize that your folks are likely to advise you to be very cautious. After all, they don't want you to find yourself in a situation you can't handle. (Often, us old folks are too conservative.)

So, while your parents or grandparents should be on your advisory team, so should a real estate agent and a loan officer who are willing to take some time to talk with you even if you are not a prospect at the moment.

Not every professional will be willing to "waste time" with someone who doesn't plan to buy for a few more years -- or even months. But those who are, are keepers. Their experience and guidance will be invaluable.

"Most real estate professionals realize some people are not coming to the table with the property address already picked out," Brousseau says. "But any realty or loan agent worth his or her salt should be more than willing to take the time necessary to work with someone who is just beginning the process."

Your advisory team might also include friends or relatives who recently became first-time owners. Their advice about the trials and travails of becoming homeowners could prevent you from making the same mistakes they did.

"The best resources will be the people around you," says Brousseau. "Each person you speak to will have had a different experience."

-- Homework. There are plenty of tools online that can give you a feel for what homeownership is like. But stay away from those sites that purport to tell you what you can afford based on your income. They are notoriously inaccurate, and often fail to include such costs as property taxes, insurance, utilities, commuting expenses and condo or neighborhood dues.

Better to disclose your financial information to a licensed loan officer. This will not only give you an idea of a how a lender will view your situation, but it will allow you to become prequalified for a specific loan amount. Remember, though, to consider all the costs of homeownership, not just principal and interest.

-- Finances. Take the necessary steps to build a credit history, or to fix the one you already have. Your credit score will be the key to obtaining financing. So if you don't have any credit cards or accounts in your name, get them now and use them responsibly.

Obtain a Visa or MasterCard, a gas card and perhaps a department store card, but no more. Don't just stick them in your dresser drawer, but don't overuse them, either: Your balances shouldn't rise any higher than 30 percent of your available credit. Pay your credit card bills on time, and always pay more than the minimum amount due.

Similarly, if your cellphone and Internet accounts are not in your name, switch them over and pay for them with your own checking account -- yes, you need one -- so the credit-score algorithm can see that you are a good credit risk.

If you already have these sort of financial habits, obtain a copy of your credit report to make sure it contains no misinformation. And if it indicates you've missed a few payments here and there, never let that happen again. Late or missed payments can be real estate deal-killers.