The vast majority of people want to buy a home at some point in their future. And as the millennial generation stabilizes their careers and builds their families, that desire is becoming more pressing. In fact, despite their reputation, 88% of millennials don’t want to be lifelong renters.
If you fall into this category, we’re here to help you. In this blog, we’re going to look at the most common concerns about buying a house, how you can afford a home purchase, and what to do when you’re ready to start looking for your first home.
Home Ownership is on the Rise
The Great Recession caused a huge dip in home ownership, and put a lot of fear in the millennial generation about buying a home. The percentage of homeowners was on a steady decline following the recession, with 2016 seeing the lowest number in decades at 62%.
The good news is, things are looking up since 2016 and home ownership is back on the upswing. Now that the economy has stabilized and employment is growing, people are looking to make a home purchase again. In 2018, 64.4% of Americans owned a home, and that number is expected to continue to rise.
Common Concerns About Buying a House
Although home ownership is on the rise, it hasn’t recovered fully from the recession dip. Of course, it will take time for Americans to regain their confidence about purchasing a home, but let’s look at what the two biggest concerns are right now:
Debt is Rising
As Americans have gained more confidence in the economy, spending has risen. But with spending comes larger purchases and more credit card debt. Even from 2017 to 2018, credit card debt rose 11%. American consumers are also thinking more about their future and investing in higher education. In 2016, the average student loan debt was $37,173 compared to $76,468 in 2018.
Living Wages are Rising
When considering a home purchase, the first thing many people consider is how much of a house payment will fit into their budget. This becomes a concern when the living wages rise. Even though spending and employment are up, so is the cost of living. In 2015, the average cost of living was $15.12 and it rose to $16.07 in 2017.
The Good News for Homebuyers
While these statistics can look scary to potential homebuyers, they’re actually good news. They indicate that Americans have finally recovered from the recession and are ready to make big purchases and invest in their future. Spending helps the economy grow, and that’s exactly what we’re seeing with statistics.
How to Afford a Home Purchase
With a stronger economy and home ownership finally on the rise, now is a great time to start thinking about your first home purchase. If you’re ready to take the leap, the first step is to get your finances in order. Here’s how you can get financially ready to buy a home:
Review Your Credit
You don’t need perfect credit to purchase a home, but your credit score plays a huge factor in what you’ll qualify for. If you’d like to improve your score, start paying off your debts now. One method to consider is to start by paying off the smallest debts first. If you don’t have a large credit history, consider getting a secured card. It can help you quickly build a good credit score.
Once you’ve got your credit history in a stable place and you’ve improved your credit score, it’s time to start thinking about how much home you can afford. The best way to determine this is to work with a lender to get pre-approved. Once you know how much home you can afford, you can start looking!
Learn about Community First’s First Time Homebuyer Loans
First Time Home Buyer Resources
Buying your first home can be intimidating, but there are a lot of great resources out there to help you. But even doing that research can be overwhelming. To help you out, we’ve curated a list of great resources to start with:
First Time Home Buyer Programs:
Community First Resources:
Still have questions about buying your first home? Our experts are always available! Call our 24/7 Mortgage Hotline at 904.371.8150 or visit our Mortgage Champions page.