The Millennial's Guide to Homeownership

Click here to view this blog in the original format.

If you are one of the many millennials who have started to see their friends becoming homeowners, and are curious about what it would take for you to do the same, Michele Harmon Team is here to help!

According to the National Association of Realtors (NAR), millennials represent 43 percent of homebuyers, the highest share of any generation! One quarter of that group are older millennials aged 32 to 41, while 18 percent are younger millennials aged 23-31.There are many myths and stereotypes that have prevented many millennials from even considering homeownership as an option for them and their families. If you are a millennial wanting to make homeownership your reality, Michele Harmon Team is here to break down the myths and stereotypes that unfortunately have been long believed to be true, as well as provide information on the opportunity you have to build wealth as a homeowner.

What is Holding you Back from Buying?

There are many millennials who have delayed home buying because they believe they do not qualify for a home purchase due to student loan debt, the inability to afford a down payment and closing costs, an insufficient credit score, or a lack of savings. However, there are many opportunities available that you may not be aware of, and it is very possible that you could qualify for a mortgage today! 

Let’s review some of the most common reasons why millennials are delaying their home purchases and how you can still become a homeowner despite these challenges. 

Student Loans

According to the Berkeley Institute for Young Americans, millennials are on track to become the most educated generation in the coming years. However, this also results in millennials being the generation with the most student debt. Although this may seem detrimental to achieving homeownership, experts and recent research has found the opposite to be true.

“With student debt on the rise, there’s been a lot of speculation about whether the cost of a college degree hurts an individual’s ability to buy a home,” said Nerdwallet’s Chris Ling. “From what we’ve seen, getting a four-year degree or higher is actually positively associated with homeownership – even when accounting for debt.”

According to Zillow’s analysis of the Panel Study of Income Dynamics, homeownership only dropped 2.1% when a married household with a Bachelor’s degree accrued $30,000 in student loan debt. Similarly, couples with at least one Master’s degree and student loan debt of $50,000, only saw a 5% decline in homeownership. 

You Don’t Have the Money for a Down Payment

You may have been led to believe that you need to have a 20 percent down payment, but there are many programs that will allow you to put down as little as 3 percent! Click here to learn more about these programs and what they have to offer.

You Don’t Have Perfect Credit

So, you don’t have perfect credit, but guess what? That’s okay! Don’t make the mistake of disqualifying yourself from purchasing a home because you do not have a perfect score. 

The credit score needed to buy a house depends on the type of mortgage you are seeking. Federal Housing Administration (FHA) loans, conventional loans, and jumbo loans vary when it comes to the credit score needed to buy a house. However, you may need a credit score of 620 to qualify with most lenders. If you opt for an Federal Housing Administration (FHA) loan, you may be able to get approved with a credit score as low as 500!

Tips for Millennial Home Buyers

Work with Michele Harmon Team

It is never wise to embark on a home purchase without someone guiding you through the process, especially if you are a first time buyer! Michele Harmon Team will take the time to understand your needs, concerns, and stresses to ensure the buying process is as stress free on you as possible. We will supply you with a complimentary Buyer’s Guide that will map out the process, we will walk you through each step, and we are always happy to answer any questions you may have!

Shop Around with Multiple Mortgage Lenders

Shopping around with multiple mortgage lenders will help you get the best deal! It is not just about interest rates, but the all-in costs and other terms and conditions on your loan. Michele Harmon Team would love to provide you with recommendations. We have a complete list of lending and financial help partners we have worked with and highly recommend. We get nothing except peace of mind if you use them, as we know they will take great care of you and help ensure a smooth transaction.

Make a budget and stick to it

You do not want to end up with more house than you can afford! Set a budget, and stick to it throughout your home search! A budget can also be helpful once you move into your dream home because you will need to be ready to cover any unexpected maintenance costs!

The Benefits of Homeownership

You are buying a home no matter what. You just need to decide if you will buy one for YOURSELF or buy one for your landlord. 

“Owning a home is one of the most common ways households build long term wealth, as it acts like a forced savings account,” Ralph McLaughlin, Trulia’s Chief Economist says. “Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”

Here are a few reasons why owning a home makes financial sense:

1. Mortgage payments can be fixed, while rent goes up.
2. Equity in your home can be a financial resource for your future,
3. You can build wealth without paying capital gains.
4. A mortgage can act as a forced savings account.
5. Homeowners can enjoy greater wealth growth than renters.

Working with Michele Harmon Team

By now, you are probably eager to get this show on the road, but how do you know if you should entrust Michele Harmon Team with such a large investment? As Dave Ramsey, ‘the financial guru’ advises, “when getting help with money, whether it’s insurance, Real Estate, or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.” Michele Harmon Team has over 350 five star Zillow reviews that illustrate Michele Harmon Team as just that! Your home is our business and we would love to take excellent care of you! Give us a call at 713-818-1330 to get started today!