5 Tips for Millennials Thinking About Buying a Home

Written by Posted On Monday, 04 June 2018 15:25
5 Tips for Millennials Thinking About Buying a Home Wellington Experience

5 Tips for Millennials Thinking About Buying a Home

Most people assume millennials are digital nomads, uninterested in settling down anytime soon. There are places to see, new jobs to acquire, and passions to explore.

However, more millennials are dipping their toes into the real estate market than most realize. In fact, millennials are the one generation currently dominating the housing market. 

The impulse is understandable. Weary of couchsurfing, renting basement apartments, and dealing with roommates, millennials are keen to craft their own spaces—and save some money while they’re at it.

In many cases, purchasing a home to call one’s own is a more financially sound decision than committing to a lifelong relationship with one’s landlord.

A new roof over your head is not all bells and whistles, however. Navigating the housing market is much like exploring a new career--it requires dedication and knowledge. If you’re a millennial dreaming of your own kitchen, keep this tips in mind before signing on that dotted line. 

  1. Understand Your Income and Credit History

Millennials are currently the largest generation in America’s workforce. Nonetheless, many are self-employed, unemployed, or seeking entry-level positions to launch their careers.

Income history is essential when applying for a mortgage or home loan of any kind. Some lenders require self-employed applicants to indicate up to two years of consistent self-employment income.

Millennials who have had a patchy work history (employed by a third party or self-employed) may find it more difficult to acquire a mortgage.

Keep tabs on your income history as well as your credit report. If possible, do what you can to elevate your current credit score via debt consolidation, on-time credit card and loan payments, and low credit utilization. I've recently written a post about getting your credit in shape for a home purchase. Read it here

Have a consultation with local mortgage brokers to understand their requirements for applicants when it comes to income and assets history and documentation. Only enter the housing market if you feel entirely confident of your financial standing.

  1. Know Your Options

Not all mortgages are created equal. While most homebuyers obtain a conventional home loan, other options do exist.

For example, if you intend to purchase a home in a rural area and are within a certain income bracket, you may qualify for a USDA Rural Housing Loan. These loans are designed to alleviate the burden of a down payment and give rural residents lower rates. 

Veterans can also qualify for VA loans, provided they meet certain requirements. Millennials making their first home purchase may be eligible for FHA Mortgages, which often offer more forgiving interest rates and down payment terms.

If you are keen to purchase land, mortgage terms are likely to be far stiffer than those for standard home purchases. Expect to pay at least 20% of the bidding price in a down payment. Applicants may also have to adhere to tighter requirements.

Improve your home loan fluency by consulting a lender or spending more time on Realty Times.

  1. Take Your Time and Keep an Eye on the Future 

A home purchase is a significant decision and should not be treated lightly. It can also be a thrilling experience and a cornerstone in your path toward independence. 

Give yourself the time you need as you wander the housing market, inspect prospective homes, and dream up your future. Trust your intuition as you proceed and always stay informed.

 Taking your time also enables you to consult family members, friends, and other millennials who have successfully purchased homes in their twenties. Empower yourself with information and a generous timeline. 

Lastly, keep your eyes on the future at all times. Homeownership is a concept that spans years and even decades. Most homes aren’t mobile either—they are very real fixtures in our busy lives.

Hold a working sense of your anticipated career, its direction, and other trajectories that may surface in your life. Keep relationships and partners in mind, as well as visions of family, moving, travel, and career changes. 

  1. Build Relationships with Lenders and Homeowners

Millennials are savvy networkers, keen to connect with colleagues, friends, and other inspiring humans. Take advantage of your social dexterity by building relationships with mortgage lenders, real estate agents, and current homeowners. 

Unfortunately, not all real estate agents and lenders prioritize robust and enriching client relationships. Seeking out the ones who do will transform the homebuying process.

Consider joining local group meetups organized through social media or other platforms. These can connect you with other prospective homebuyers and existing homeowners to give you valuable insight into the market and industry.

Opt for lenders and/or agents who place a premium on communication. Companies that also demonstrate a willingness to educate potential buyers through webinars, info sessions, and client engagement are also likely to offer a meaningful relationship. 

Be Certain of Your Location Ahead of Time

A home purchase can be somewhat of a permanent decision, particularly if you are committing to a purchase with a partner or spouse. For this reason, be certain of your home's location before you buy. Location may depend on your career--in fact, you may be relocating due to a new position--as well as on your preference for a specific kind of community or neighborhood.

If you are purchasing a home that is far away from your present location, be absolutely confident in your choice prior to relocating. Study city demographics and proximity to life essentials, such as schools, medical centers, and grocery stores. If possible, visit your future community before you plunge into the real estate market.

  1. Don’t Let Others Dissuade You

Millennials often get a bad rap, whether or not they are thinking of “settling” or traveling the world. (I know because I have been there). Perusing the housing market can be discouraging at the outset, particularly for first-time buyers. 

Some millennials face parental or peer pressure to either purchase a home or stay away from mortgages.

Whatever the case, choose confidence in your pursuits. Don’t let others dissuade you from homeownership or nomadism. Build confidence through research, data insights, and solid networking.

If you do discover concrete obstacles to your vision of homeownership—such as finances—Realty Times is here to help. Browse advice from agents, homeowners, and more.  

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Kate King

Kate King is a freelance writer, editor, and blogger. 

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