How Millennial Homebuyers Can Overcome Three Major Challenges in Today's Housing Market
Most recently, researchers said a new subset of millennials—geriatric millennials—refers to older millennials born between 1980 and 1985.
Most recently, researchers said a new subset of millennials—geriatric millennials—refers to older millennials born between 1980 and 1985. Add this to a previous hypothesis that there are six additional types of millennials, and it might be delving too deeply into this generation.
But whether they are a "geriatric" millennial or a "trendsetter" millennial, buying a house in today's real estate market presents the same challenges that the previous generations didn't have to scale.
Smaller Nest Eggs Make Buying A Home Difficult
Millennials now make up the largest share of today's new home-buying population.
At the same time, financial challenges – like high student debt rates, smaller savings nest eggs, smaller investments, and lower financial literacy – make it difficult for millennials to break into homeownership.
According to a new report from Freddie Mac, nearly half of millennial renters who want to buy a home have no savings. While alternative down payment options exist, statistics show that the share of millennials with savings accounts is "alarmingly low."
A mortgage broker will work closely with clients to help get them on a successful financial path toward homeownership. They can also help them understand their loan options and whether or not the client qualifies for various down payment assistance programs that help make a home more affordable.
Read about a recent experience adjusting financial habits before purchasing a first home.
Self-Employed Millennials Have a Harder Time Qualifying for Loans
Even before COVID plunged many into a remote lifestyle, the gig economy rose – millennials comprise a large part of it (38%). This is shifting the dynamic of the labor force. Without evidence of a traditional income, it's harder for self-employed workers to qualify for a home loan.
Recent loan program qualifications have been relaxed a little for gig workers. This is great news!
Applicants without regular income sources and credit challenges within the last twelve months can apply for financing and qualify in some circumstances. These updates are opening up the opportunity for self-employed applicant clients who previously have been turned down for loans.
Mindful Money will help guide a self-employed borrower through the pre-qualification process, including understanding what's needed to prove steady income and, in some cases, raise their credit score if needed. They also stay on top of loan program updates for self-employed borrowers, and would be happy to share what's new with clients anytime!
Rising Home Prices and a Housing Shortage Make It Hard to Compete
It's a little unbelievable in the housing market today, no matter where a client is located!
An extreme housing shortage in many locales drives higher home prices. Mortgage rates have also been trending upward compared to last summer's historical drop. Rising lumber prices contribute to the shortage because new home construction in many neighborhoods has had to be postponed.
Bidding wars are happening, and homes are going under contract in record time. Unfortunately, this unique combination of factors doesn't bode well for some millennial homebuyers. It's challenging to compete in multiple offer situations when they may lack the funds for a down payment and closing costs – and when credit challenges are involved.
The Solution
There's good news about how long these market conditions may last.
Some market analysts predict more housing inventory will be available soon. Mortgage rates are also predicted to remain low throughout the end of this year.
Achieving the dream of homeownership when it's the ideal time for a client's financial situation is worth the wait. Today's real estate market conditions won't be forever. There have been conditions like these before. What's most important is getting your client on a path toward
Saving for a home
Becoming qualified to finance a home
Feeling the rewards of achieving homeownership when it's the right time
This is true whether the client is a millennial, a Gen X'er, a Gen Z'er, a Baby Boomer, or a member of the so-called Silent Generation.
Ready to Buy A Home or Get on a Path Toward Homeownership? Call Mindful Money, a licensed mortgage broker in Arizona, Florida, Colorado, and California. They can help clients find and apply for the right home loan for their needs and embark on a path toward homeownership by helping them understand financial strategies that will help them qualify for financing.
Call them at 480-313-7103 or email sam@mindfulmoneyusa.com to discuss the many paths toward homeownership!
* Specific loan program availability and requirements may vary. Please contact the mortgage advisor for more information.
