After a long period of time in which researchers and economists worried that Millennials would never start purchasing homes en masse, it appears the generation is now pushing forward toward property ownership. The Washington Post reported that millennials now account for the highest volume of prospective house shoppers in the country, and that the group is viewing homebuying in a far more favorable light compared to several years ago.
While this is good news on the whole, there are plenty of challenges that millennials face when trying to find the right property and, more importantly, get approved for a mortgage. Let's take a look at some of the ways members of this generation can better position themselves to afford their desired first home.
The financial management side
Millennials who take care of their credit scores and finances will generally have a strong opportunity to purchase a home comfortably – and get approved for a mortgage – regardless of where or when they choose to apply, The Virginian-Pilot explained. This does take a lot of effort, especially in the age of high student debt that holds many younger families from even trying to purchase a home.
However, carefully monitoring credit scores and saving cash can be manageable, and will improve chances of qualifying for a home loan. According to the news provider, young adults will also want to ensure that they are capable of proving at least two years of work history to increase their favorability among potential lenders, and should keep in mind that a 20 percent down payment is not necessarily required to successfully purchase the home. There is always mortgage insurance when this sum is simply too high, and that can be removed when financial situations improve.
Finally, The Virginian-Pilot suggested looking into a preapproval process before applying for an actual mortgage, as this can reveal some of the finer points of a loan that they would be able to acquire, such as interest rates, terms and the dollar amount.
Home shopping best practices
The other side of this coin involves the actual home search process, which will be equally important in the grand scheme. For example, jumping on the first home visited will rarely be a wise financial decision, and a failed mortgage application could hurt the applicant's credit score. As such, NerdWallet urged millennials to be patient in the home search and wait to apply for a mortgage until they have found the right property.
The publication noted that inspections of the property, along with a strong idea of desires with respect to the type of neighborhood and home that would best serve the millennial's needs, will also help to ensure that the purchase is a financially smart one. Homebuying can be extremely stressful, but a well-informed, persistent and patient approach will help to expedite the process and reduce the risks of setbacks due to credit score issues.