Millennials (born from the early 1980s to the early 2000s) are responsible for 31 percent of recent home purchases, according to the National Association of Realtors®.
During the recession of recent years, many Millennials moved in with their parents until they felt comfortable and stable in their job situation. Now this generation is financially prepared – and ready to purchase their first homes.
So what do you need to know about mortgage financing if you’re a Millennial in today’s real estate market?
- Review your credit. Credit is an integral part of the financing process. You will need to understand your credit profile and be aware of what lenders are looking for. Ideally you need two or three types of credit reporting, with at least two years of history. If you have less than this you may still be able to purchase a home, but you’ll need some proven history of rent, cell phone payments, etc.
- Student loan payments count. Certain mortgage programs may be okay with student loans that have been deferred for a period of time. However, if you have student loan payments beginning or resuming in the next 9-12 months, your lender will need to consider the upcoming payment in your qualifications.
- Document, document, document. Mortgage lenders will require you to provide copies of pay stubs, W-2s, tax returns, bank statements and more. Be proactive and gather this paperwork before you meet with a Mortgage Consultant, so they can more accurately determine if you can qualify for a mortgage.
- Down payments are within reach. A common misconception among Millennial buyers is that you need 15 percent down to purchase a home. There are loan programs readily available with 3.5 to 5 percent down, and in some cases, this can be a documented gift from a family member. Specialty programs like NC/SC Bond programs can assist a buyer with the down payment as well. Homes that qualify for USDA financing have the benefit of no money down.
The good news is that there are mortgage options out there for Millennial buyers. Getting into your first home requires some preparation and time, but pays off in the end. And you don’t have to go it alone; your Allen Tate Mortgage Consultant is here to help.
By: Lisa Green (Vice President of Loan Origination)
Allen Tate Mortgage NMLS# 79543
Loans available in NC/SC
All loans subject to credit and collateral approval.
*USDA and NC/SC Bond program requirements include maximum income limits and other requirements.