Mortgage For Millennials

Mortgage For Millennials

Am I A Millennial?

Am I a Millennial? If you are a Millennial are YOU prepared for the mortgage experience? You ARE a Millennial if you were born sometime between the early 1980’s and the mid 2000’s. Millennials range in age from mid-teens to mid-thirties. They represent the largest generation in the United States.

Millennials are media literate and technologically inclined having grown up in an era when the newest device or latest social media platform was being introduced in rapid succession; often every month.  In their electronics-filled and increasingly online and socially-networked world Millennials had to be quick studies to learn how to operate the newest and best that the world of technology and social networking had to offer. To millennials the Internet, social networks, smart phones and apps are a necessity as opposed to a luxury.

In addition, millennials are considered the best educated generation. Millennials have a certain skill set that uniquely prepares them for the workplace. Educated and open minded, millennials are critical thinkers and problem solvers- characteristics much coveted in any working environment.

Millennials have grown up in a time of technology right in the palms of their hands. They are the first generation to have been raised with personal computers and smart phones. They have experienced and engaged in the birth of social media. With such easy access to the world around them, Millennials’ beliefs are shaped by a wide array of opinions and ideas. Technology has helped to shape this generation into thinkers that are open minded and well informed. Millennials will conduct online research and gather bits of information from many sources before making decisions. So, Millennials operate differently; they grew up surrounded by technology, which shaped how they interact with the world.

Millennials are the largest pool of potential homeowners. They are coming of age: Millennials are in the midst of making career decisions and creating families.

If you are a Millennial looking to join the ranks of homebuyers to homeowners here are some things you should consider:

What To Look For In A Mortgage Lender

Positive Reviews

The best compliment a former client can give ME (as a Mortgage Lender) is a referral! If they express trust in, and positive affirmations about, their homebuying experience than I have fully and completely done my job- I have served the homebuyer in a manner that they would like their family, friends or colleagues to experience when buying a home.

Community Activism

Millennials are community minded. They seek out businesses that endeavor to give back to their communities. They have a conscience and look to work with a Mortgage Lender with similar ethics.

There are many opportunities to serve: Habitat for Humanity, United Way, local charities feeding and clothing the less fortunate, American Cancer Society and much more. These are but a few that I have had personal experience volunteering with. Your mortgage lender should be an integral part of the community helping to lift up and enhance the lives of others.

A Strong Digital Footprint And Ability to Engage

Because Millennials are technologically competent much of their research on mortgage lending will be done through online sites and social media outlets. It IS possible to reflect your business ethics and practices through technology. To discerning Millennials through the process of information gathering, they will know your strength of character and whether or not you can meet their expectations. Millennials willingness to engage depends on familiarity and trust.

Mortgage Tips For Millennials

Establish A Relationship With A Mortgage Lender

Establish a relationship with an experienced lender who will discuss your financial picture with you and how to meet your goals of homeownership. A lender should survey your goals and work to find a loan option that will support them. There are many loan options available but not all will meet your financial needs.

Examine Your Finances

While Millennials are the best educated generation, it comes at a price. They are also a generation that carries a lot of debt- specifically student loans. When examining your finances you need to consider your student loans- even if they are in deferred status. A Mortgage Lender must include a percentage (specific to each loan type) of your student loan in your debt ratio for monthly payment.

In addition, auto loans and credit card debt will be included in your debt-to income. A trustworthy Mortgage Lender will help you to determine a monthly payment in your comfort zone as opposed to what you qualify for. Many Millennial first time homebuyers will qualify for a much larger home loan then they need or want. It does NOT mean it is right for you.

Save For Your Down Payment

Most of us don’t pay cash for our first home, our “for now” home or even for our “forever” home. Almost 100% of Millennials will buy their home with a mortgage. That’s why it’s important to have a “picture” that reflects strong fiscal responsibility.

If you qualify for a conventional loan your minimum down payment may be 3%. The more you put towards your home initially, the lower your monthly payment. And if you have 20% to put down private mortgage insurance will not be required (PMI).

If you struggle to save for a down payment, Millennial home buyers may qualify for loans with 0% down (Rural Development- USDA). This type of loan has income and property limitations. For qualified active military and Veterans there is also a 0% down home loan (VA Loan). Or an FHA loan (3.5% down) and much of the down payment can be “gifted”. Please click here to find out more about each loan type.

Research your monthly spending patterns by analyzing your checking and savings statements. Do you want to buy a home more than you desire eating out? More than paying for the latest trends in fashion? More than the luxury vehicle?

Check On Current Mortgage Interest Rates

All Mortgage Lenders have access to the same pool of competitive rates. Your interest rate is going to be based on the type and size of your home loan and your credit score. Debt to income also plays a part in your qualifying interest rate.

The operative word is “current”. Mortgage interest rates are ever changing depending on market movement, inflation and global economic behavior.

In the 1980’s the mortgage interest rates were in the mid-to-high teens; typically around 18%. Today the historically lower interest rates are much more favorable for Millennial homebuyers.

Compete With Other Homebuyers In the Housing Market

To be competitive in a competitive housing market, arm yourself with a preapproval for a home loan before you make an offer. A preapproved loan means that your mortgage lender has reviewed your documents most often to include, but not limited to: W2s and Tax Returns, paystubs and bank statements. This process takes more time than a pre-qualification but holds more weight with a seller showing that you are, indeed, a serious buyer.

Next Steps

Kara Davis of Crew Lending can help you achieve the American Dream of homeownership. She is a leading provider of mortgages in Lake Charles, Sulphur, Westlake and the entirety of Louisiana. She can also lend in 47 other states. Remember that customer service is key in the mortgage lending process. Kara Davis is a Baby Boomer with a heart for Millennials and ALL generations!