This is the third post in a three-part series about how millennials are changing home dynamics and how families can adapt to their needs. Read the first post of the series here: “Why are Millennials Really Living at Home?” Read the second post of the series here: “3 Things You Need to Survive Living with Your Adult Children.”
Are you one of the many millennials who believes that home ownership is beyond your reach?
Several recent surveys demonstrate that millennials value home ownership but many do not consider themselves financially capable of buying. However, with the right know-how and resources, there are still many opportunities available for first-time homebuyers—no matter the moniker of your generation.
Here are five things every millennial should know about buying a home:
1. Boost Your Credit
According to data from FICO, the big name behind your credit score, stricter credit score requirements could be holding you back. After the housing crisis of the last decade, lenders have tightened their purse strings, and millennials saddled with student loan debt or a short credit history are paying the price.
A majority of millennial homebuyers don’t meet the median credit score of 750 to obtain loans backed by Fannie Mae, one of the biggest players in the industry, and a third don’t meet the minimum credit requirement of 620.
If you’re just beginning to think about buying a home—maybe several years down the line—then now is the time to address your credit score. Even little changes to payments can make a big impression over time.
2. Get Educated
NerdWallet’s recent study of millennials and homeownership suggests that education is as much a barrier for first-time homebuyers as is credit—if not more so.
“Many millennials believe they are unable to afford homes, when really many of them are unaware of the different financing options that exist.”—Chris Ling, Mortgage Manager at NerdWallet
Educate yourself about different financing options. But, also, take some time to learn about the full homebuying process, from searching the MLS to making an offer to what fees are required at the closing table. In Western North Carolina, agencies like OnTrack WNC offer homebuyer education and counseling.
3. Get Preapproved
Before you begin shopping for a home, enhance your buying power by getting prequalified or preapproved. Both options help you determine how much home you can afford based on the specific financial information you share with your lender. Especially with preapproval, this gives you significant buying power with a seller who recognizes you will be approved for a loan.
Loan preapproval requires that the lender verify your financial information and serves as a commitment to lend a specified amount based on that verified information. If a seller knows your financing is secure, your offer is stronger. Preapproval also gives you peace of mind as you shop for a home, knowing that you will qualify for the proper mortgage amount.
4. Know Where to Look (and What You’re Looking for)
Buying a home can be a “hurry up and wait” endeavor. According to the National Association of RealtorsⓇ’ (NAR) September report, housing inventory is down 6.8% over last year, but properties on the market are selling in an average of 39 days. That means that homebuyers have to be patient about finding a home that matches their criteria, but once one does come on the market, you need to be ready to pounce. Having a clear idea of the features you want (and can afford) in the most desirable neighborhood will help you focus your search.
Beverly-Hanks makes home buying in Western North Carolina easy. Create a “My Account” on beverly-hanks.com to save property searches that meet your unique specifications and receive daily automatic property updates on price and status changes so you never miss a home you’d like.
5. Ask Questions
Want to learn more about Federal Housing Authority (FHA) loans, which require lower down payments? Not sure what closing costs are, much less what they mean? Whatever your questions, a professional REALTORⓇ like the agents at Beverly-Hanks can help.
In a 2015 survey by Fannie Mae, 42% of those ages 18–34 said they didn’t know what lenders expect of them, and 73% were unaware of lower down-payment options that range from 3–5% of the home’s purchase price, as compared to the commonly cited lender preference of 20%.
Don’t let a few questions get in the way of homeownership. Start asking your questions today and get the answers you need to buy your first home.
All real estate is local. In order to make confident real estate decisions, we believe it is important for you to have timely and neighborhood-specific information. If you would like more information about buying a home, our experts at Beverly-Hanks are here to help. Contact us today to speak with a Beverly-Hanks real estate agent about buying homes and land in Western North Carolina.
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