For many young homebuyers or first-time homeowners/buyers, the entire process can be daunting. According to a recent survey, some homebuyers between the ages of 25 and 40 are uncertain about the homebuying process and what they can buy. Here’s what they said:
“1 in 4 underestimated their buying potential by $150k or more”
“1 in 4 underestimated the increase in value by $100k or more”
“47% don’t know what a good interest rate is”
Due to uncertainty, many young homebuyers abandoned their search or, worse, decided that the home was not suitable for them and they never even started the process yet.
If you’re interested in buying but don’t know where to start, here are three important concepts that works wonders every time.
1. What you need to know about Down Payments.
Savings for down payments can be considered one of the biggest obstacles for homebuyers, but you don’t have to. As Freddie Mac says:
“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”
According to the latest report by the National Association of Realtors (NAR) on the generation of homeowners and sellers, the average down payment for homes purchased between July 2019 and June 2020 was only 12%. Judging by age, the number is even smaller. For buyers between the ages of 22 and 30, the average down payment was only 6%.
2. Maybe you can afford your dream house after all.
Many people have changed their living spaces by working from home, exercising, and generally spending more time at home than ever before. However, some young homebuyers believed they couldn’t afford a home to meet their growing needs and decided to continue renting. This means that they won’t be able to appreciate some of the long-term benefits of owning a home. An article recently published by the NAR states:
“Many young adults are underestimating how much they need for homeownership, the survey finds. Millennials underestimated how much home they can afford right now, how much interest they would pay over a 30-year mortgage, and how much home values appreciate, on average, over 10 years…”
It’s important to know how much can you afford at the beginning of the buying process, which can be a turning point for you to decide from renting to owning.
Most experts predict that interest rates will rise in the coming months, and even a slight rise can affect purchasing power. If you’re not confident in buying a home, there’s no better time than it is now.
If you feel overwhelmed by the prospect of starting a search for your home, you are not alone. Call us today to elaborate on the process, what you need to get started with your search, and what you expect.
Bottom Line
If you’re planning to be a homeowner one day, the best thing you can do is start preparing now. Even if you don’t think you’ll purchase for a few years, let’s connect today to discuss the process and to set you up for success on your journey to homeownership.
