For those of you who believe that millennials aren’t interested in the American Dream — think again. About 70% of millennials who became adults in the year 2000 want to purchase a single-family home of their own. The question isn’t whether or not millennials believe in homeownership, that dream is much alive and well, contrary to what the media says. In fact, millennials became the largest group of recent homebuyers (32 percent), according to a recent survey by the National Association of Realtors.
The issue nowadays is that buying a home in your 20’s seems unattainable. And it some cases, it is. Income and good credit are important factors in your mortgage applications. Many millennials fall short, simply because they haven’t had the time and experience to build on it. Add the recent recession into the mix and all of the chaos that has snowballed since then, owning a home in your 20’s seems pretty impossible, right?
Wrong. There are ways to make a millennial’s application stronger and more desirable. Here’s how to do it:
Have a strong down payment ready
A major difference between someone who’s owned property before and is looking to buy and a millennial in their 20’s is money. According to a NAR survey, the median income of a millennial is $76,900, while someone older may be making a bit more, or may have more savings in their pocket over time. Here’s a tip to get ahead: Have a 20% down payment ready.
Whether your dream home is a starter home under $250K or an investment property $400K+, make sure that you have some savings for a 20% down payment. You can also consider an FHA Loan with a low mortgage rate. Make sure you have a co-signer with a solid income to be considered.
Play to your advantages
An advantage you (the millennial) may have over a current home owner is that you’re move-in ready. Sellers find the waiting game to be quite inconvenient for them. A current homeowner looking to buy may have to wait to sell their property first, or are currently in transition so the cash is a little tight.
It’s a bonus that you are move-in ready. Play it to your benefit.
Purchase a condo or a starter home
If your dream home is a luxury 3-4 bedroom home somewhere in the Land of Suburbia and it seems like a long-shot, then try a starter home and work your way up. There’s nothing wrong with purchasing a smaller home. It’s pretty much the norm. Just make sure to save some money on the side for remodeling–whether you factor that into your overall budget when purchasing, or plan on saving for it in the near future. Buying a starter home that you can’t sell or rent to others will be a huge disadvantage to you.
There are benefits to buying a starter home versus a “forever” home. For one, many up-and-coming neighborhoods around major cities are becoming revitalized. You could easily ride the wave as prices increase over the next few years. Secondly, having a starter home let’s you get a taste of what homeownership is like, without locking into your “forever” home too early. In other words, you’ll gain an understanding of what it truly costs to be a home owner, both financially and emotionally.