Millennials are growing older, getting jobs, and starting to buy homes. Entering the housing market might have been delayed for some, but Zillow reports that millennials are now the leading demographic of homebuyers.
So, what does it mean for the housing market, now that millennials are the market’s driving force?
Millennials Entering the Housing Market
After years of living in cramped apartments with roommates, dorm rooms, and at home with their parents, millennials are entering the housing market, thereby reshaping the market as industry businesses change to meet this demographic’s needs.
Millennials are knowledgeable, active, and more tech savvy than previous generations of homebuyers.
Most millennials are first-time homebuyers. Many are two-income households, have smaller down payments than past generations, and are looking for homes they can afford without enslaving themselves to a mortgage.
The majority of millennials are looking for homes with 3-4 bedrooms and 2-2.5 baths. They are skipping the “starter home” and moving right into homes where they will raise children. They are looking at the environment and the schools in the area, which means suburbs are often more popular than downtowns.
Mortgage Tips for Millennials
Of course, the hardest part of buying a home for many homebuyers is qualifying for a mortgage. This is especially true for millennials, who typically owe a great deal on school loans, and who have more difficulty finding good paying jobs than previous generations.
Fortunately, changes by Fannie Mae this year make it easier for millennials with student loans to qualify for a mortgage. And, FHA home loan limits are higher for 2017, which help millennials skip buying a starter home and purchase a larger home to raise a family.
So, here are the most important tips for millennials thinking about buying a home:
- Call, visit, or go online to work with a mortgage broker as soon as possible to be pre-approved for a mortgage. This will help you learn about your credit rating, mortgages that may work well for you, the down payment and closing costs, and how much you can afford to spend on a home. You can also learn about government programs to help purchase a home.
- Monitor and clean-up your credit report, which might help you raise your credit score and get a better interest rate.
- Try not to apply for new credit, which will probably lower your credit score.
- Continue to use credit, but keep balances low relative to credit limits.
- Don’t close old, unused credit accounts, which might lower your credit score.
- Make sure bills are paid on time.
Millennials who can save extra money before purchasing a home have an opportunity to save a great deal of money while they own the home, by qualifying for a mortgage with a lower interest rate. Here are some tips:
- Pay down debt to lower your debt-to-income ratio, so you can qualify for a mortgage with a lower interest rate.
- Save to make the largest down payment you’re comfortable with, while also building cash reserves. This will help you get a lower interest rate and save money over the life of the loan.
- Save to pay the closing costs, so you don’t have to finance them.
Marimark Mortgage serves the mortgage needs of homebuyers and homeowners in Florida, Virginia, and Pennsylvania.
We specialize in conventional home mortgages, FHA, VA and USDA mortgage options, refinance loans, and reverse mortgages. We’ve worked extensively with cash-out refinancing, and help clients with HARP refinancing to lower their monthly mortgage payments.