Homeownership is an exciting venture. As new homeowners learn quickly, having your own home opens up wealth-building opportunities, learning opportunities, memory-making moments, and new adventures.
The road to homeownership for today’s younger generation has been different and riddled with unique twists, turns, and the occasional roadblock. Certain factors contributed to this slow start—including student loan debt and certain cultural changes—but if you’re a young person or Millennial searching for your first home, let’s talk about some of the common questions and misconceptions you’re likely to be faced with during this journey.
Here at Cornerstone Realty, we pride ourselves on guiding home buyers and ensuring that they’re on solid footing every step of the way. That being said, embarking on home buying can seem like you’re walking on quicksand. But it doesn’t have to be this way! Don’t sink into misinformation or fall for a bad deal. Work with someone you trust and begin your adventure on high ground.
Compared to generations of the past, Millennials were thought to be behind the game in the home-buying department. Recent data, however, shows the trend to be reversing. Forbes reported that Millennials have represented the largest share of the home buying market for the past five years in a row. This generation seemed to have some new factors to contend with including an increase in student loan debt and what seems to be a cultural shift to build a career before settling down. This isn’t stopping this tech-savvy hard-working generation from looking into homeownership. Here is some useful advice:
Don’t Be Fearful, This is An Exciting Time! Opportunities Will Follow Suit
People often hold back on the purchase of their first home on account of horror stories they hear from friends or family members drowning in large mortgage payments or tales of foreclosures and economic strife. While this can certainly happen, working with the right broker and the right amount of planning will set you on solid ground.
The key to your first home is understanding the implications of a mortgage, the financial responsibility of a home, and having some sense of your future. For many young people, this is a scary prospect, but it doesn’t mean you have to have your entire life planned out. It means having some idea of what the next few years of your life look like so it can be factored into your financial plans.
Choose the Right Realtor and Plan Accordingly
Like many major decisions in life, they are best made after some careful planning, not in a moment of passion. Spend some time looking at your options and shop around. Many home buyers today don’t realize the plethora and wealth of information available to them as buyers. Don’t confuse a realtor with a real estate agent; they are often used interchangeably but a realtor can provide far more guidance when it comes to the overall home buying process.
These pieces of advice can make a world of difference. One of the things we hear from recent first-time homebuyers is how exciting it is to move into their new home. There is a freedom that comes with knowing you are working towards paying off something that belongs to you. With the right planning and financial strategy, it can be a great way to build wealth.
Common Misconceptions About First Time Home Buying
Many young home seekers hold back on their dream of owning a home because they have been misled about the requirements and the process. Qualifying for a mortgage indeed became more complicated after the 2008 housing crisis, but the right realtor can walk you through your options based on your particular circumstances.
Let’s look at a few common misconceptions:
You need a 20% down payment. Not so! Many people have the idea that you require a twenty percent down payment on a home. There are plenty of resources around for first-time homebuyers that can help with closing costs and down payments. Some of these resources include first-time homebuyer educational programs, conventional loans, FHA loans, and VA loans.
It’s cheaper to rent than own. Well, sometimes. It’s true that when you’re renting, you don’t worry about maintenance. And yet, home payments tend to be stable (if you choose a fixed-rate) and rent payments tend to rise. Depending on your circumstance, if you’re in a stable income and plan to be living there for a few years, buying a home can help you build wealth, as opposed to giving rent payments away for two or three years.
You have to pay student loans off first. One big question that young buyers have is whether they have to completely liquidate their student loans before buying a home. While it’s a good idea to continue making payments and working on minimizing that debt, it doesn’t mean you have to have it at zero before you can become a homeowner. New rules have made qualifying for a mortgage easier, even with student loans. Fannie Mae, the largest purchaser of residential mortgages, has changed the underwriting rules and made qualifying for a mortgage easier for people with student debt.
Cornerstone Realty is Ready to Help
You’ve heard it expressed a million ways: buying your first home is a big step, one of the biggest financial decisions of your life, a big commitment, a bit of the American Dream. Whatever way you put it and wherever you are in life—whether just starting a family or relocating with your growing family—your first home is an exhilarating experience and an opportunity to learn about the buying process and the many opportunities open to you. Life begins to open up, as people that go from being renters to being homeowners suddenly realize.
Here at Cornerstone Realty, we help guide first-time homebuyers through the intricate process. It’s a time for growth. The opportunities await. Let us show you! Call us today.