First-Time BUYER SURGE
A surge in first-time home buyers is expected to hit the housing market over the next 3 years
REPORT: 8.3 MILLION FIRST-TIME BUYERS ARE COMING
About 8.3 million first-time buyers are projected to enter the mortgage market between 2020 and 2022, predicts a new report from TransUnion. That marks a jump from the 7.6 million first-time buyers that were added in the previous 3-year period (betwwen 2016-2018). However, plenty of housing market challenges persists for new buyers, slowing home price appreciation, low unemployment, increased wage growth and low interest rates are are helping home affordability. Joe Mellman, senior vice president and mortgage business leaders at TransUnion stated there is optimism that “first-time home buyers will contribute more to homeownership than at any time since the start of the Great Recession.”
Read on for a few interesting facts found in this study…
First-time home buyers are younger today than they were around the time of the Great Recession. The median age of buyers fell from 39 in 2010 to 36 in 2018. The first-time homebuyer share has increased by 6% among 25 to 34 year-olds, according to TransUnion’s research.
943 residents were surveyed who have never owned a home, but who have a goal to purchase a home within the next 3 years. Their top motivators to purchase a home were to seek more privacy (45%) and to build equity or weath (44%). Other common reasons include getting married (24%) and expanding their family (23%).
The most common reason respondents cited for delaying a home purchase was concerns of not having enough money for a down payment or monthly payments (58%). Half of those respondents –or 51%– said they believed they needed to meet a down payment requirement of 10-20% to purchase a home.
GREATER BUYER EDUCATION IS NEEDED
Many respondents said they don’t understand the homebuying process. 67% believed a high credit score was needed to purchase a home, and 34% said they were not familiar with any mortgage financing options. Consumers were unfamiliary with mortgages programs available to people with lower credit scores or those that require only 3% down.
Homeownership programs are more widely available and flexible than consumers think, making homeownership more than just a dream… it can be your reality!
HOW MUCH CAN I AFFORD?
Before you start looking for a home, find out how much you can actually afford. The best way to do that is to get prequalified for a mortgage. To get prequalified, you just need to provide some financial information to your mortgage lender, such as your income. Your lender will review and tell you how much you can spend and estimate your monthly mortgage. This information is valuable, as it sets a price point for homes you can look at with your Realtor®.
CHOOSE THE RIGHT LOAN
Lenders have a wide range of competitively priced loan programs. Every home buyer has their own priorities when chooseing a mortgage. Some are interested in keeping their monthly payments as low as possible. Others are interested in making sure that their monthly payments never increase. And still, others pick a loan based on the knowledge they will be moving again in just a few years. Whatever your situation, pick the loan that’s best for you.
FIND THE RIGHT REALTOR®
Realtors® are important partners when you’re buying or selling a home. Realtors® can provide you with information on homes and neighborhoods that isn’t easily accessible to the public. Their knowledge of the home buying process, negotiation skills, and familiarity with the area you want to live in can be extremely valuable. Many potential pitfalls are avoided when using a Realtor®. The best part? They’re compensated from the commission paid by the seller of the house.
SHOP FOR YOUR HOME & MAKE AN OFFER!
With the help of your Realtor®, start touring homes within your price range. You might find it helpful to take notes on all the homes you visit. You will see a lot of houses! Take note of all the little details about the house – what you like, what you don’t. Evaluate the neighborhood. Take as much time as you need to find the right home, then work with your Realtor® to negotiate a fair offer. Conduct a home inspection to check for signs of structural damage or other things that might need fixing. Your lender will arrange for an appraiser to provide an independent estimate of the value of the home. Once all the loan paperwork is signed, the deed recorded and key in hand, you’re a homeowner, ready to move into your new home!