While their intentions are in many ways driven by personal, aspirational reasons – more space, family stability and the pride of homeownership – the low mortgage rate environment, increasing rental costs
"The propensity for young adults to test the waters of homeownership continues to increase and has become more evident as renters are seeing the overall value of owning a home," says Deborah Wahl, senior vice president and chief marketing officer at PulteGroup, Inc., noting that more than 50 percent of millennials reported that the desire to own/build equity was the primary reason for purchasing a new home. "However, beyond finances, it is important for potential buyers to take several other factors into consideration."
Below are tips for first-time homebuyers looking for the right housing match:
Know Your Financial Situation – Start saving for a down payment and talk with mortgage lenders about available loans well in advance of your purchase. Understand there are special federal, state and locally administered financial programs for new homebuyers, such as FHA and HUD loan programs. Additionally, it's important to take into account other factors beyond your mortgage, including homeowners insurance and property taxes. By doing your homework, you will know what you can afford and comfortably make a decision about this important investment.
Compare Owning vs. Renting – Buying can be smarter than renting from a financial standpoint, but it has other advantages, as well. Owning a home provides you with a great deal of freedom and decision-making autonomy. No more will you have to worry about the noisy neighbor upstairs or accidental scratches on the wall from decorations. You'll have the power to select paint colors and plant flowers throughout the yard. Also, houses tend to offer more storage space.
Weigh New vs. Used – If you want to choose the floor plan and customize a home to fit your needs and lifestyle, building a new home may be the right choice for you. Popular options new homes offer today include more open, larger spaces, master bedroom suites, island-centric kitchens and bigger outdoor living space. Customizing a new home also provides the opportunity to design your home and include amenities that meet the needs of your growing family – if that's in your future. Additionally, new homes can be up to 30 percent more energy efficient and often come with a builder warranty. If you're handy and don't mind a fixer upper, resale can be an attractive route as well.
Examine the Location – Consider your surroundings when deciding upon where you want to live next. If you plan to start a family, research the local school district and other family offerings such as nearby parks and community centers. For fun, test out the local retail scene and entertainment options to see if it caters to your lifestyle. If you're a commuter, determine if the area is supported by adequate public transportation or provides easy access to major highways. Many in the housing market also care about ensuring they still live within close proximity to family and friends, as only 21 percent of homeowners are willing to move away from their families.
Select the Right Builder – If you decide on a new home, select a builder who has experience in the type of home and in the location you want. Make sure they have a history of building quality homes and are financially stable. Moreover, how easy are they to work with? Some builders today have gone digital to enhance customer service and help buyers stay on top of the latest with their new home. Look for on-line design centers that can help you make important design decisions, for example, or portals in which you can stay up-to-date on how your new home is progressing. Lastly, take time to check their references and talk to past customers.
Confide in Trusted Sources – More than 90 percent of home shoppers today are plugged-in to the internet and use it as their main source of information. While this is particularly true with millennials, don't forget to seek advice from two trusted groups: real estate agents and your personal network, including your parents. Approximately 60 percent of millennials say they would rely on both sources, as each has extensive experience in purchasing homes and can provide personal guidance toward the successful purchase of their home.
"With third party data showing that 90 percent of millennials plan to purchase a home at some point in their lives, it's important first-time homebuyers have access to the right tools and information to ensure their first home purchase is one they are proud of for years to come," adds Wahl. "With many options to choose from, starting from a point of knowledge will go a long way towards achieving their dream of homeownership."
Reprinted with permission from RISMedia. ©2013. All rights reserved.