The Market's Going Millennial! Five Tips for Today's First-Time Home Buyer

When it comes to first-time homebuyers, 2015 is likely to be known as “the year of the millennial.” This group of young professionals is poised to pounce on the real estate market and for good reason. For them, the time may never be better.

Stereotypically-speaking, the millennial generation has sometimes been cast out of the serious home-buying market, for reasons that may include “they aren’t interested in rooting themselves in the suburbs.” Instead, again speaking solely stereotypically, they favor a more transient, urban lifestyle where there is a coffee house and biking trail within walking distance.

Notice, we said “stereotypically-speaking.”

The truth about millennials is that they often are seeking the same things that traditional first-time homebuyers have been for decades… a safe, affordable place to put down roots and start a family.

The modes of searching for that first home may have changed; but, truly, most things have changed since our parents decided to put down roots and raise a family. So, what should a first-time homebuyer, who happens to fall into that millennial generation, know when they’re preparing to buy a home?

Here are five tips to help that trend-setting (or not so much) millennial find and buy their first home:

Decide to buy and follow through. When we said that there may be no better time for a millennial buyer to purchase their first home, we weren’t kidding. The fact of today’s market is that private mortgage insurance, or PMI, has dropped and many major mortgage lenders are also dropping the required percentages for down payments. What used to be a 20% down payment has turned into only five or even three percent.

Embrace the burbs… at least take a look. OK, if you are one of those millennials who does prefer a more urban lifestyle, you already know that the costs of living in that mid-city high-rise apartment can be astronomically higher than moving outside of the city limits. In fact, in most places, owning a home is cheaper than renting anyway. So, if you’re serious about buying, understand that you may also need to be serious about stepping just a little outside of your comfort zone to find your perfect first home.

Remember that buying a home is about growing your wealth. Past generations have looked at home ownership as recognizing a piece of the American Dream. For millennials, that may be the case; but, it is also a money-making transaction. The millennial generation sees home ownership as a way to increase their wealth, pay off nagging student loans or other bills and, ultimately, create more money for the future. Cha-ching!

Use the help that’s out there. We’ve already mentioned the reduced PMI, current low interest rates and a dropped down payment percentage; but, guess what, millennials? There’s more. For today’s first-time homebuyer, some mortgage lenders are offering pre-purchase loan counseling. Sure, it may sound like that college class you often skipped to grab an early lunch; but, unlike that class, this one offers valuable knowledge about new homeownership and covers things like monthly insurance fees, property taxes and what to do if you get behind on mortgage payments. Pre-purchase loan counseling can even cover forgotten-about homeowner costs like buying home maintenance tools.  

Show your age, particularly when it comes to technology. We probably don’t need to reemphasize that the millennial generation has taken a certain amount of flack when it comes to being serious about home ownership. But, if there ever was a time for millennials to embrace their generational stereotypes, it is when they are searching for that first home. Those “tech-savvy” millennials have more tools at their fingertips (bad pun, but we ALL can access nearly everything with our smartphones today) than any other first-time home-buyer ever dreamt was even available. There are a lot of valuable websites and apps that can help with the home-buying process. If you’re a tech-savvy millennial, use that to make your first home-buying experience easier!  

Finally, a tip for real estate agents. Millennials make up nearly 20% of households in the U.S. today. So, that 1/5 of the potential market is a group that you should get comfortable working with. Learn more about how you may be able to better help your millennial buyers here.