Thinking of buying a home in the near future? 2020 has certainly been a year of ups and downs, but it’s a great time to start your real estate adventure!
As a millennial, unfortunately, you’re probably used to being the brunt of the joke: a generation living with their parents for far too long, waiting “too long” to get married, and carrying a ton of debt. But you know there’s much more to your situation than the stereotype. In fact, back in February, Realtor.com predicted that millennials would make up the bulk of real estate buyers in 2020.
Regardless, buying a home is a big decision! It’s totally normal to feel a little overwhelmed. Keep reading and we’ll share some of our real estate insights, including current market conditions, how millennials buy homes overall, and how to take the first step toward your homeownership journey.
What to Know About the Current Home-Buying Climate
First, let’s talk about the current landscape. Life is a little different in a lot of ways right now thanks to the COVID-19 pandemic, but that doesn’t mean your dream needs to be put on hold. It’ll just look a bit different!
Even pre-pandemic, we were seeing some changes. As we discussed in this article about how the mortgage industry is changing, some of the biggest shifts have been related to technology. Alternative mortgage marketplaces, like Mortgage Goat, now give prospective homeowners more options and greater rate transparency. And online paperwork processing speeds up the process overall, so you can get approved for your mortgage (and into your new home) faster. All great things! And then COVID-19 hit…
The Impact of COVID-19
While there were definitely some initial uncertainties, with many people delaying their plans to see how things would shake out, the reality is that the real estate market is alive and well. In fact, in some areas it’s booming, as many workers have gotten the go-ahead to work remotely for the foreseeable future and have opted to forgo expensive tech bubbles for the more affordable towns and suburbs.
Additionally, current mortgage rates have remained at all time lows, making it a great time to strike as a first time home buyer. Other housing market updates to note:
- Because of these low rates, the allure of refinancing is stronger than ever for many current homeowners
- With more borrowers (new and existing) clamoring to take advantage, we’re also seeing some of the toughest loan-approval standards in years
- With everything in flux, mortgage lenders may be all over the map in terms of requirements and rates — which is why it’s more important than ever to shop around
What to Know About the “New Normal”
Next, it’s important to note how your experience might be different compared to what your friends or family who’ve bought in the past have told you:
- You’ll likely be connecting digitally with your mortgage broker, which may include virtual home tours, online-based pre-approvals, and video-chat check-ins along the way instead of going into an office (no biggie for you tech-savvy millennials, right?)
- As we mentioned in the last section, mortgage lenders may have stricter requirements — you may need a higher credit score or down payment than you expected
- Lenders might check your employment status multiple times — as unemployment claims surge around the country, your lender may want to make sure you’re still solid at every step of the process
- You may not need an appraisal — typically part of the loan approval process, some lenders are waiving the appraisal requirement simply because these services are so backed up in some areas
Easy, right? You’ve got this.
Tips for Getting Into Your New Home
So what’s it really going to take to get you into your first home? With the current market conditions and industry shifts, we’d say millennials are perfectly poised to make the move. Below are some tips to keep in mind.
Level-Up Your Knowledge
Before you even begin perusing Zillow or starting your next “dream home” Pinterest board, we recommend brushing up on your knowledge of the overall home-buying process. Make sure you understand what you can actually afford, what kind of closing costs to prepare for, what the market is like in your specific city (and desired neighborhoods), your mortgage options, as so on. The more you understand, the better prepared you’ll be from all angles — emotionally, financially, and mentally!
No, we’re not talking about a trip to the hair and nail salon here. Instead, you’ll need to be an attractive candidate for a loan. This includes:
- Saving up for a solid down payment (ideally 20% of the home’s total cost, although requirements may vary by lender)
- Paying off any credit card or student loan debt
- Establishing a strong credit score (ideally 600+, but requirements can vary here as well)
- Not making any crazy credit moves in the past couple of months (we know that Nordstrom credit card offer is calling your name, but just say no!)
Finally, make sure you’re being strategic. First time home buyers often get caught up in the emotions of the decision, especially if you think you’ve found your dream home. The reality is there are plenty of homes out there. If you need a bit more time to save up for your down payment or you’re worried about job security, it’s OK to wait. Or, this also might mean adjusting your “must haves” list if you live in a competitive (or pricey) market. Home buying is sometimes about making compromises in location, size, and amenities. And by the way, there’s nothing wrong with the suburbs!
Get Started with Mortgage Goat
Ready to get started? We’re here to rebuild mortgages for the 21st century, and we’ll help you every step of the way. With our easy online application, you’ll get the best rates, tons of options to choose from, and quick approval. Contact us today to get in touch!