Totaling more than 80 million individuals, millennials represent the largest generation in the U.S. By 2025, they will claim three-quarters of all jobs. Also considered the best educated, 35% of 25 to 29-year-olds hold a degree, while at the same time carry some of the highest debt levels due to student loans and credit card balances. Having graduated and moved into the job market during the Great Recession, millennials face lingering effects of challenging employment prospects are still with them today.
Millennials got their reputation for being renters because so many were at the age when renting is common. But that has changed, and many are turning to home ownership as the next phase in their life. People 36 years old and younger comprise the largest share of home buyers, according to the National Association of Realtors.
Many first-time Millennial homebuyers start out by looking for their dream home rather than a starter home—and social media, movies, and television may be to blame. One’s dream home and starter home are rarely the same house, and millennial homebuyers may be disappointed to learn this.
Millennials want a speedy, reliable process in the marketplace. When it comes to mortgages, they will do their part to move the application along. They want companies that utilize a complete online beginning to end loan process. Digital natives that haven’t experienced life without the internet, and mobile phones, they expect each phase of the home buying journey to connect.
Not all Millennials are able to save 20% to buy a house, especially young adults in entry-level roles. They may not be aware there are many options that don’t require the traditional 20% down payment. For example, it’s possible to put 5% down, get one loan for 15% and a second for 80%. Mortgage insurance is normally required for loans without 20% down, which becomes one more monthly expense.
Agent or Not?
During their home buying experience, Millennials won’t use only one, but several websites and social media platforms to research and form opinions about the neighborhood and home, as well as the mortgage company. They may be less inclined to use an agent in their search in spite of the fact that a real estate agent is aware of what’s selling and at what price, which neighborhoods that are in demand or overpriced, and where the homes are that fit their client’s budget. That information is not always online and can affect the home’s price and enhance bargaining power. Agents of all kinds are generally bound by state real estate licensing laws to act in a fair and ethical manner.
Millennials can determine monthly mortgage costs with online mortgage calculators, but they don’t tell the whole story. Mortgage payments are just one aspect of buying a home. Many Millennials are unaware there are quite a few more upfront expenses, including closing costs, appraisals, inspections, the first year of homeowners’ insurance premiums, and escrow accounts with 3 months of property taxes. There are other costs to be considered that will have to be paid.
Renters rarely pay for property repairs or improvements. Transitioning from renting to buying and owning a home, millennials may not have considered or budgeted for a leaky roof, a broken dishwasher, or a struggling HVAC system. Their perception of the difficulty, time, and costs of repairing or remodeling, may be unrealistic due to the popularity of many home improvement shows currently broadcast. Frequently, repair projects hit snags, and this alters the cost. If they’ve considered a fixer-upper they need to be sure they can afford the property as well as all the repairs and upgrades. They also need to know if desired improvements will add to the property’s resale value. Then there’s regular maintenance to consider, like lawn mowing, landscaping, HVAC filters, and the like that renters rarely have to pay out of pocket.
First Florida Mortgage Can Help
At First Florida Mortgage, we are a Florida-based mortgage company. We want to help you through every step of financing your new home. Fill out the quick contact form or call First Florida Mortgage today at 1-800-501-2131 to speak with one of our Florida mortgage specialists and get a free good faith estimate.