A low credit score thwarted Marie Kapelke and her husband Mike Biethan’s plans to try to buy a house early last year.
When the couple, both 26, met with a mortgage specialist in December 2013, they found out Biethan would need to improve his score in order for them to get pre-approved for a mortgage. In fact, neither of them knew their credit scores before meeting with the banker, but they were ready to buy their first home after living in Seattle for about six years.
“We found out, OK your credit score really affects your interest rate,” Kapelke says. Biethan worked to improve his score over the past year, and the two revisited homeownership in the fall. They closed on a townhouse in West Seattle last month.
With rents rising into unaffordable territory, housing inventory up and mortgage rates hovering below 4%, 2015 may prove to be the year of homeownership for millions of Millennials. Real estate website Zillow predicts Millennials will overcome Gen X as the largest group of home buyers this year — more than half of 18- to 34-year-olds said they plan to buy a house in the next one to five years, according to a survey by Zillow last summer.
But after putting away enough savings, the biggest hurdle for Millennial buyers may be the learning curve that comes with understanding the process, as well as a host of new financial terms, trade-offs and commitments to consider.
It’s a stressful process, especially when you’ve never done it before, recent first-time Millennial buyers say. Kenny Coleman, 25, bought his first place — a loft-style apartment in Cincinnati — in December. He says the first bank he went to for a mortgage wasn’t good at explaining the financing process to a first-timer. “They used all this jargon,” he says. “And they’re talking about all these different insurances.” Coleman, who says the process took him from “complete idiot to pretty well versed” in a matter of weeks, ultimately went to a different bank that was willing to give him a fixed-rate mortgage instead of an adjustable-rate mortgage.
You don’t have to have the traditional 20% down payment to become a homeowner, says Tim Savoy, a real estate agent with Coldwell Banker in Washington, D.C. He says many of his clients aren’t aware of programs, like a local one called DC Open Doors, that will cover much, and sometimes all, of a down payment.
Rob Keiser, a financial aid officer and executive management trainee at his family’s Keiser University system in Florida, says he didn’t realize how expensive homeowner association fees could get, especially in Florida, where certain neighborhoods require homeowners to join nearby golf or country clubs.
“There were places that were cheap and then had over $1,000 in HOA fees (due quarterly),” says Keiser, 25, who bought his first house in May in Delray Beach. He also recommends reading HOA contracts and making sure your lifestyle will fit with rules on pets, curfews and visitors.
Susan is committed to making each transaction work seamlessly, guiding and educating her clients along the way.Contact Us