Smart Moves

She's a 21-year-old college senior who's been a resolute saver since childhood, when she collected coins her older brothers carelessly let drop behind the sofa cushions in their family home. Through college, she's saved by money living with her parents and working part-time jobs.

Now with a war chest of $10,000, the young woman has a firm plan. After graduating next spring, she'll buy a modest house in a middle-income suburb near her new full-time job as a health care manager. Her savings will help fund her down payment and closing costs.

"I want to build ownership. It's ridiculous to throw money away on rent," she says.

In the years after the housing bubble burst, a number of real estate analysts asserted that many in the millennial generation -- now age 18 to 34 -- were indifferent to homeownership. But housing economists say that's no longer true, if it ever was.

"We're seeing an influx of millennials driving the market now. Almost half the buyers within the last year were in this age band," says Aaron Terrazas, a senior economist for Zillow, the real estate data firm.

Terrazas says many millennials have done the math and realize that, given high rental costs, ownership is often the cheaper option. But even though low down payment mortgages are available to qualified buyers, he says most first-time purchasers seek to amass as big a down payment as possible.

"With a larger down payment, they can decrease their monthly mortgage costs," he says. "Yet with rising rents and student loans, it's incredibly difficult for millennials to save."

Raising funds for a home purchase isn't the only challenge confronting first-time buyers. In popular areas, many also face rival purchasers competing for available homes due to a shortage of entry-level inventory.

Are you a cost-conscious homebuyer who hankers to get beyond the rental stage? If so, these few pointers could prove useful:

-- Look for a mortgage lender to help you set a spending ceiling.

Real estate specialists always advise first-time buyers to determine their mortgage borrowing capability before heading out to look at property. That way they won't get their hearts set on a property that's unreachable for them.

"Getting a mortgage is very tough for first-time buyers," says Tom Early, a veteran real estate broker. He says purchasers should make sure a lender takes them through a serious pre-approval process.

He encourages first-timers to meet face-to-face with a lender and spend up to an hour in that meeting -- or enough time to ensure all their questions are answered. Soon after this meeting, the lender should issue a "pre-approval letter" that spells out their full borrowing capacity.

-- Prepare a household budget before touring property.

Prior to granting you a pre-approval letter, your lender will likely ask about your major obligations, like payments on your credit cards and car loans. But chances are the lender won't ask about your other obligations, such as a commitment you've made to a religious or charitable institution.

"When your lender sets your borrowing limits, he doesn't see the full picture. That's why I suggest you do a personal budget before deciding how much to spend on housing," Early says.

First-time buyers should also take into account the money they'll need to spend to put their property into move-in condition.

"It doesn't matter how wonderful a house you buy, the odds are you'll want to make it more to your tastes. At the minimum, you'll probably want to paint, replace worn carpeting and improve your yard," Early says.

Also, make sure you factor in your carrying costs for homeownership -- such as your energy bills.

"Pre-approval helps you define your top limit on financing. But that's just the beginning. You have to decide for yourself how much you're comfortable spending. These days, almost all buyers stay under their borrowing ceiling," Early says.

-- Consider only a "plain vanilla" fixed-rate mortgage.

John Rygiol, a long-time real estate broker who heads his own firm, says there are few instances that justify first-time buyers taking an adjustable rate mortgage, especially with fixed-rate mortgages currently hovering near historic lows.

A traditional fixed-rate mortgage is especially helpful at a time when rates are projected to rise, Rygiol says.

"Low and stable mortgage interest rates are one of the few benefits left in this economy," he says.

-- Make sure you think about resale before choosing a home.

No matter how long you intend to live in your first home, Early says it's smart to pick out a property that should be easy to sell when it's your turn to do so.

"Think about the back end of your transition. Remember that someday that house will be on the market again," Early says.

Keeping in mind your budget constraints, what features are ideal when choosing a house that's very marketable?

"If you can afford it, always try to buy a place with plenty of bedrooms," Early says.

What other features should you look for?

"Ideally, you'll want a place with at least two bathrooms, or a minimum of a bath and a half. Also, remember that many buyers are strongly attracted to a family room with a fireplace that's big enough for a very large TV," Early says.

Even more important is finding a prized neighborhood location. Well-rated schools, prime shopping and good roadway access are all features that help define a popular neighborhood, Early says.

"Never compromise on location," he says. "You'll be vastly happier owning an asset in a strong neighborhood. Even in economic downturns, property in strong neighborhoods holds its value better."

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

No matter how long your house is on the market before being sold, it can be tremendously difficult to keep a home clean and orderly during the showing period, however short.

Aside from correct pricing, the most important steps you can take involve de-cluttering and making sure your house is kept clean during the showing period, says Eric Tyson, a personal finance expert and co-author of "House Selling For Dummies."

Here are a few pointers for sellers:

-- Do as much preliminary pre-packing as possible.

Vicki Norris, a professional organizer and former real estate agent, knows how hard it can be to keep a house in prime showing shape. It's especially difficult when people are selling against their will -- for instance, in the wake of a job loss.

"Sometimes life takes people off track and they get unusually disorganized," says Norris, who runs her own consulting firm, Restoring Order (www.restoringorder.com).

To limit upkeep demands during the showing period, Norris recommends that sellers clear through their clutter in advance of putting their place on the market. Throw away or give away any items you don't intend to keep, and place the remainder in neatly stacked boxes in your garage or other storage area.

"You don't have to remove everything, but reduce the quantity. For example, if you can winnow down an over-packed bookshelf from 200 to 30 books, that would be great," Norris says.

-- Seek to keep your house in good condition every day.

Most people who have their homes up for sale for a lengthy period can't count on hired help to do the daily work necessary to keep their place in tip-top showing condition. Still, they must always be ready for visitors.

Ashley Richardson, a real estate agent affiliated with the Council of Residential Specialists (www.crs.com), advises clients to set aside 15 minutes each morning before work to straighten the home.

"At the very minimum, every day you'll need to sweep the kitchen, put the breakfast dishes in the dishwasher and hang up any clothes lying around," she says.

-- Ponder the use of a cleaning service.

Are you sloppier than the average homeowner? If so, it might be wise to pay for what real estate agents call a "super-duper cleaning."

"If you start with a professional cleaning at the beginning, you'll have an easier time keeping your house tidy all the way through to your sale," says Sid Davis, a real estate broker and author of "A Survival Guide to Selling a Home."

Though it's likely to cost over $100, he says a single in-depth cleaning could hold you for more than a month before another in-depth cleaning job would be necessary.

Unfortunately, hiring a cleaning crew won't spare you the need for routine upkeep. "This will be no substitute for keeping your dishes washed and your bathroom toiletries put away. But it's still a big step going forward," Davis says.

-- Try to get everyone in your household to cooperate.

After a home has sat unsold for more than a month, those who live there can easily lose focus and slip back into their bad habits.

'The problem is that keeping your house in show condition is not a relaxed way of living, so people get tired of it," Davis says.

According to Richardson, it can be especially tough to ensure that children's rooms are kept orderly and that their toys are put away.

"Often, the kids are protesting the move. So the parents may need to clean their rooms for them. Alternatively, to get the kids to do it themselves, you might need to bribe them with pizza or a dinner out," she says.

-- Realize that the ordeal is temporary.

Donna Goings, a veteran real estate agent, says homeowners who earnestly want to sell should "keep their houses looking good enough to appear in a magazine." But she cautions that even picture-perfect properties that are fairly priced can languish unsold for a lengthy period through no fault of their owners.

"Sometimes, there's no rhyme or reason why a particular house won't sell for a long time. Even if you make the house beautiful and set the price right, it could stay on the market for months," Goings says.

Richardson advises her clients to avoid dwelling on critiques of their property.

"Buyers are more candid than they were in the past, and sometimes can be quite blunt in their feedback after a showing," Richardson says.

To limit the amount of unfiltered and discouraging negativity that can flow to you about your home, she suggests you tell your listing agent to filter out all pointlessly critical comments about your place.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)

With mortgage rates hovering near historic lows, many real estate specialists worry that homebuyers could be tempted to overspend. They fear their clients could be at risk financially if they overshoot their budget and then face a job change, a marital breakup or another unforeseen event.

"It's always good to be a little on the conservative side when taking out a mortgage," says Joseph Schiro, a real estate broker who has sold property since 1993.

"I always tell clients that before they choose a property they should run the numbers and make sure they stay skinny on their overhead," says Dale Robyn Siegel, a home loan broker and author of "The New Rules for Mortgages."

"Before making any major financial decision, your first task is to ensure you'll have the funds to meet your (core living expenses) every month. Otherwise, your stress level and quality of life could be greatly impaired," Siegel says.

How should you go about determining your core living expenses, known in the industry as your "nut"? Arlen Olberding, a certified financial planner, urges would-be purchasers to take a step-by-step approach. As a first step, he says you should carefully review your checking and credit card statements to see where your money has gone during the past six to 12 months.

Once you've categorized your past spending, it's time to comb through the columns, determining which among your non-mandatory costs you'd be willing to trim to afford the sort of house you wish to purchase.

"In creating a spending plan, you need to think both about your necessary expenses and lifestyle choices, like an urge to travel," says Olberding, who specializes in helping middle-income clients meet their money goals.

Once you've calculated your living costs, along with quality-of-life choices you consider essential, it's time to compare this monthly total to the net income you're bringing in. The difference should be the funds available to cover your mortgage expenses and future home upkeep and utility costs.

Here are a few pointers for homebuyers:

-- Disabuse yourself of the notion that lenders know what you can afford.

After the financial crisis of 2008, mortgage lending standards became very stringent and they remain so, Siegel says. This tightening is making it much harder to gain lender approval -- particularly for people who are self-employed or lack a track record of job stability.

Yet ironically, Siegel says many who can jump over lender approval hurdles are still able to borrow more than they reasonably should. Why? Because the full extent of their living costs isn't apparent to the lender who reviews their file.

For example, in assessing your affordability range, a lender won't take into account private debts. Nor would the lender know you've signed a contract guaranteeing your tuition payments to the private school your child attends.

"If an expense doesn't show up on your credit report, the bank doesn't know about it," Siegel says.

Because a lending institution has limited information on your living costs, she says it's critically important you do your own pre-purchase computation to determine the realistic scope of your monthly nut.

-- Include inflation in your cost-of-living calculations.

Although the government's Consumer Price Index has shown relatively little movement in recent months, inflation is still a major factor for many households. Especially hard-hit are families with young children who face hefty day care costs and those who've opted for private schooling after their kids reach kindergarten.

Then there's the soaring expense of higher education.

Along with education expenses, health care costs have risen dramatically, led by the cost of employee contributions to health plans and the premiums paid for the kind of individual policies used by those who have no access to insurance coverage through work.

Even core energy expenses that are normally immune from big price swings, like utility bills and food costs, can rise unpredictably. In assessing their future living costs, Olberding advises clients to factor in average price increases of as much as 5 percent per year for their core expenses.

"No one is immune from inflationary increases. So it's always better to err on the high side when you're preparing a spending plan," he says.

-- Factor savings into your financial calculations.

If possible, Olberding recommends that adults of all ages strive to contribute to their retirement savings each year a sum equal to 15 percent of their gross income. And he urges that this outlay be classified as a core expense when deciding how much they can afford to cover their housing payments.

"Savings should be one of those core costs you don't forget when figuring out how big a mortgage you can handle safely. Buying your dream house is great, but you want to do so without breaking your budget," Olberding says.

(To contact Ellen James Martin, email her at ellenjamesmartin@gmail.com.)