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Millenials: It really is the time for you to buy a home of your own

5 Tips for Millennial Homebuyers

tips for millennial homebuyers

6 MINUTE READ

 Millennial’s are buying homes at record numbers. To be sure they are doing it right, here are five tips.  So, go ahead, make your homeownership a dream come true this year.

1. Pay Off Student Loans and Other Debt

What’s the biggest challenge facing millennial homebuyers? Student loans. Over 44.2 million Americans are paying off a national student loan debt of $1.48 trillion. In 2016 alone, the average student loan debt was $37,172 per graduate!(2)

As if student loans weren’t enough, consumer debt has postponed the home-buying dream of many millennials.(3) In fact NAR reports that, second to student loans, the two expenses that delayed saving for a down payment were credit card debt (32%) and car loans (32%).(4)

Buying a house is the most expensive purchase you’ll make. As such, it’s important to be debt-free before securing a mortgage. If you have any debt, get on budget and use the debt snowball to pay off those loans. Only then will you be ready for the next challenge: the down payment.

 

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2. Save for the Down Payment

Another tip for millennial homebuyers may not be that surprising. Most of us don’t pay cash for our first home.

98% of millennials buy with a mortgage.(5

That’s why it’s important to have a strong down payment. These help offset costs by lowering your interest rate and helping you pay off a mortgage more quickly. We recommend 10–20% for a down payment. Furthermore, if you have 20% tucked away, you’d bypass private mortgage insurance (PMI). This is an additional insurance requirement lenders impose on most first-time homebuyers.

If you’re struggling to save for the down payment, you’re not alone. In fact, one fourth of millennial home buyers accept monetary gifts from friends or relatives.(6) According to Builders Online,(7) millennials sometimes tend to save for more than seven years for a downpayment.

Be patient and stay the course if you’re attempting to save. Start with a clear plan. Know how much house you can afford.

3. Stand Out in a Competitive Market

If you’ve already paid off your student loans and saved for your down payment, great work! The next step is to get into the housing market. In the past few years, the housing market has had a shortage of sellers. This raised the prices of homes and caused competition among buyers. Gen Xers are typically buying more established homes rather than starter homes. Effectively, your competition is other millennials and, likely, your parents.

Yep, that’s right. Just as millennials are finally moving out, empty-nesting baby boomers are downsizing into the homes preferred by millennial homebuyers. You might find yourself in bidding wars with buyers who have a bigger budgets and more home-buying experience.

We have prepared a comprehensive free, no obligation, no agent hassel e-book:
“Step-by-Step Guide To Home Buying” that you will be able to immediately download. Just Click here

your lender has looked over your finances and decided that you can cover the down payment and the mortgage payments. Though it can take some time to get, a preapproval letter sends a powerful message to the seller that you’re a serious buyer.

Second, act decisively. Do everything to keep the process moving. For example, tighten the timeline of your home inspector. Most inspectors can inspect a house within five days of your request. Never ask a motivated seller to wait weeks for a home inspection if you can get it done in days.

Lastly, be human with the seller. Send a handwritten letter, explaining why you and your family like the home. Selling a home can be emotional for homeowners, so you never know how far a personal letter can go.

4. Find an Affordable House in a Seller’s Market

Another challenge facing millennials is the rising value of homes. For many of us—especially those that have just managed to pay off student loans and land a stable job—rising market prices could be the most frustrating hurdle we face.

Fortunately, the housing market is beginning to slow down. NAR predicts a 1 to 3% growth in housing prices this year, which is far less compared to the 5 to 7% annual growth over the last five years.(8)

My best advice, then, is patience. Once you start shopping, don’t give in to the temptation to stretch your dollars and buy a home that’s out of your price range. Keep your monthly housing payment (which includes mortgage, taxes, insurance, HOA dues, etc.) to no more than 25 to 30% of your take-home pay on a 15-year, fixed-rate conventional mortgage. No home is worth sacrificing your retirement or your kid’s college fund.

5. Gain Experience With the Buying Process

One of the best things you can do as a first-time homebuyer is familiarizing yourself with the buying process.

That’s why it’s extra important for millennials to work with experts who know what they’re doing. Look for an agent who brings at least four years of experience to the table, one who knows the market well enough to find a great deal on the home that’s right for the buyer.

Partner with a real estate pro who has the heart of a teacher and takes time to listen to your needs and answer your questions. A good agent is more concerned about your bank account, not theirs.

We have prepared a comprehensive free, no obligation, no agent hassel e-book:
“Step-by-Step Guide To Home Buying” that you will be able to immediately download. Just Click here

If you’re looking for an agent to guide you to a smart first home purchase, we can help! Our Endorsed Local Providers (ELPs) are real estate experts with top-notch customer service. They can help you find a home you love in your budget!

Find an ELP in your local market today!

 

The main reason young people are working towards home ownership? 93 percent cited the desire to control their living space.  Renters don’t have that freedom.

Despite millennials’ home ownership goals, we would counsel young people that their fears of not being able to get financing are largely unfounded: Given the estimated monthly income of $2,940 for Americans ages 25 to 34 (from the Bureau of Labor Statistics) and median estimated monthly principal and interest payments of $945 (from Black Knight Financial Services), millennials, on average, would reach a monthly debt-to-income ratio of 32 percent, well within the range acceptable to most lenders when considering mortgage applications.

Below are some additional tips, steps, and advice for buying your first home.  First time home buyers who understand the process and know what to expect significantly improve the chances they will have an enjoyable and successful experience!

In addition to the material below, we have prepared a comprehensive free, no obligation, no agent hassel e-book: “Step-by-Step Guide To Home Buying” that you will be able to immediately download. Just Click here

1. Understand Mortgages

2. Interview and Hire A Top Realtor®

It’s obviously extremely important to hire a top Realtor® when selling a home because the real estate agent is your trusted advisor throughout the process.  Confidence in the agent’s knowledge and experience is extremely important.  Many buyers don’t take hiring a top Realtor® serious enough though!
It’s especially important when buying a home for the first time that a top Realtor® is hired.  Hiring a top agent, especially a “Buyer’s Agent” dedicated to serving only you, when buying your first home can make all the difference between an enjoyable home buying experience or a miserable one!

3. Learn About Real Estate Contracts & Contingencies

4. Have Realistic Expectations

5. Research, Research, Research!

When buying your first home it’s highly recommended to do a ton of research.  With the internet it is extremely easy to find quality information relating to home buyingin general and about every home you are considering!
The Bottom Line
Buying your home can be difficult and confusing but with the proper steps, it doesn’t have to be!  It’s extremely important when buying your first home you understand the process and are comfortable with the major decision you’re about to make.

We have prepared a comprehensive free, no obligation, no agent hassel e-book:
“Step-by-Step Guide To Home Buying” that you will be able to immediately download. Just Click here