To Challenges (and the Solutions) Faced by Millennial Homebuyers

Millennial homebuyers looking at a modern house

Millennials face a unique set of challenges when buying a home. From high amounts of student debt to social pressures to live in the “perfect” home, millennials have plenty of concerns when it comes time to buy property.

But with the right attitude and the right strategy, the home-buying process can be fun and enjoyable, resulting in a house that fits your needs and your budget.

Millennial Homebuyers: Top Concerns & Tips for Success

High Debt-to-Income Ratios

While the differences between the millennial generation and generations that came before tend to be over-exaggerated, one factor that seems abundantly unique to millennials is the massive amount of student loan debt. While the stats vary (and some claim that previous generations are actually worse at handling debt than millennials), student loan debt seems to be a specific problem for people in the millennial generation. This student loan debt, which can amount to hundreds of dollars every month, can drive up your overall expenses.

How to Deal with a High Debt-to-Income

If your student loans are driving up your DTI, there are a few measures you can take to balance the equation. Your first goal should be to reduce your debt load by eliminating or reducing other debts. If you can, pay off credit cards, car loans, and other small debts (small, at least compared to student loans) and you’ll make your DTI more appealing to a mortgage lender. If you can’t pay off loans, refinancing and restructuring your debt load so you have a lower monthly payment may help. 

No Down Payment

This, again, is heavily tied to the student-loan issue. If you have hundreds of dollars going towards your college degree, it can be extremely difficult to save for a large down payment. Even 3.5%, which is the minimum for many government-backed loans, can seem unattainable if you have student loan debt.

How to Deal with No Down Payment

There are really two possible solutions to this problem. The first is obvious: making increased efforts to save money for your down payment. This can mean taking on extra work or cutting back on your expenses, among other possible routes. The second option is to look for zero-down loans, which are available through various institutions such as the USDA. You could also look at piggy back loans and other creative options through your lender.

Brightly-lit kitchen with an open floor plan.

Pressure to Find the “Perfect” Home

There is a huge variety of homes available on the market, but young buyers have been exposed to basically one type of property for years. The open-concept, brightly-lit homes with marble countertops and subway tiles have been marketed as the ideal home for years; to the point that many millennials feel this is the ideal home. Some millennial buyers have become unwilling to even consider an alternative. It also doesn’t help that everyone else seems to have this “perfect” house, so the pressure is now on to have one for yourself.

How to Deal with Pressure to Find the “Perfect” Home

Before you make a purchase, take the time to research a wide variety of houses, with all types of different floor plans, color schemes, and kitchen materials. With the challenges you may face based on budget and debt loans, millennials may want to consider purchasing an older home that they can update over the years. Besides that, styles change, so don’t too focused on today’s trends.

Pressure to Live in the “Right” Neighborhood

Along with the pressure to live in the right home, there may be pressure to live in the right neighborhood, especially if you have children and want to ensure they attend a quality school district. The social pressure to live in a high-quality neighborhood can be overwhelming, causing millennials to either avoid purchasing a home or go beyond their budget just to live in the “right” area.

How to Deal with Pressure to Live in the “Right” Neighborhood

Eventually you have to accept that your budget may largely dictate where you live, or at the very least, where you don’t live. However, remember that nothing is permanent, and as you gain financial stability and advance in your career, you may eventually be able to afford a home in the area you desire. But for now, respect your budget and choose a home you can afford.

Fast-Paced Sales in Popular Markets

One issue that is common among today’s buyers is the increased competition in “hot” markets. Homes in areas of the country that have exciting work, enticing features, and plenty of opportunity that millennials desire are often difficult to purchase because competition is so fierce. You can barely look at a home in hot markets without it being sold to another buyer.

How to Deal with Fast-Paced Markets

You might feel like making the winning bid is impossible, but if you make competitive offers with as few contingencies as possible, you can get a home in the area where you want to live. Be flexible with the seller, and don’t be afraid to tell them how much you love the home; it just might tug at their heartstrings and help you win the house. 

Rising Mortgage Rates

If you have discussed purchasing a home in the past few years, you’ve inevitably heard someone tell you that you absolutely have to buy now. Interest rates are rising and if you don’t get a fixed-rate mortgage immediately, so they say, the cost of homeownership will become severe. This type of time-sensitive pressure is enough to make millennial runs and hide from the real estate market, or purchase a home when they’re not ready.

How to Deal with Rising Interest Rates

There is, of course, some truth to the notion that buying a home before interest rates rise will mean a more-affordable mortgage. But it’s far more important to wait until you are ready to make the purchase. For this point, you can relax and take your time; if you’re not ready now, it’s far better to be patient. Get your financial situation in order rather  than make a purchase that you can’t handle (regardless of an interest rate percentage point) and you’ll be much happier with the results.

Making the Home-Buying Process Easy for All Generations!

If you want help finding an affordable mortgage, let us help. We take a common-sense approach to lending approval, helping you get pre-approved so you can start shopping for your future home!

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Testimonials

Thank you Chad and Team

Chad and his team have been a pleasure to work with. I’m a 3rd time home owner. Wish I had known Chad and team a lot sooner. He made my 3rd home purchase very easy. There were a lot of moving pieces and they handled with professionalism and care. Juliann was a pleasure to work with too. The whole team made it possible for us to move into our dream home. Thanks you Chad and Team!

“Juliann – Thank you very much for your patience and help with everything. I can say 150% that we could not have gotten through this without you. I have been through this process before a few times BUT never have received this type of care/attention. This process is intense and you managed to humanize this life changing experience for us – rather than being a loan number. If you or Home Point ever need an official recommendation from us, you can count us in.”

“Chad and his group made the mortgage approval process smooth and understandable. Multiple updates and explanations during the process kept me informed of progress. Chad also provided great advice on other home services, in particular an insurance company that saved me thousands of dollars a year on home and auto insurance.”