It wasn’t so long ago that everyone thought millennials would never buy homes. With overwhelming student debt, an inadequate savings account, and average credit scores, millennials were often looked over as a prominent home buying generation. But, in 2020, millennials have passed up baby boomers and Gen Xers for the fifth year in a row! If you aspire to be one of the many millennial homebuyers in 2020, here are four things to make that dream come true.
Tips For Millennial Homebuyers
Pay off Major Debts
One of the largest hurdles for millennial homebuyers is student loans. Over 44 million Americans are paying off student loan debt. Since buying a home is likely the most expensive investment you’ll ever make, it’s best to be as close to debt free as you can. If paying off your loans is not possible in the next decade, then it’s best to get on a budget and manage your monthly payments, seeing how much room you’ll have for an incoming mortgage payment as well as a down payment. A mortgage lender can tell you how to get on track with your payments before buying a home.
Most of us don’t pay cash for our first home, so buying a home requires a down payment. Having a strong down payment can help lower your interest rate as well as pay off your entire mortgage faster. While 10-20% down is ideal, some loan types – such as FHA – require as little as 3.5% down. The catch with a lower down payment is the additional requirement of mortgage insurance added to your monthly mortgage payment. If you feel overwhelmed saving for a down payment, you’re not alone. Some millennials need more than seven years to save for a down payment, so don’t feel bad if it takes time.
Affordable House in a Seller’s Market
A big challenge millennial homebuyers face is the rising value of homes. It’s best to be patient and to not give in to the temptation to stretch your dollars and buy a home that’s out of your price range. No home is worth sacrificing your retirement or your kid’s college fund! That’s why it’s best to find an affordable house in a seller’s market. It may require some renovation, but at least you won’t be struggling to make your mortgage payment each month.
Know the Buying Process
One of the best things you can do as a millennial homebuyer is to get familiar with the buying process. Working with experts who know what they’re doing (agent, lender) will likely result in a seamless process that’s enjoyable and exciting for you and for them! Remember, a good agent and lender is more concerned about your bank account, not theirs. Being confident and knowledgeable about the home buying process will help you move faster on the road to closing on a home.