It's important to keep the possibility in mind that you could be on the hook for other hidden homeownership expenses and plan well in advance. Here's how.
Throughout the summer season, many new prospective home buyers are preparing to enter the real estate market, while others are still simply considering buying a home. One of the reasons why many younger individuals don’t actually begin the buying process is because they’re unsure of the steps involved. However, many potential homeowners don’t need to worry about over complications if they work with a professional who can help them through the process.
Millennials and Gen Z Are the Most Uncomfortable
A recent Ipson and Freddie Mac survey found that while Millennials were largely uncomfortable with the buying process, members of Gen Z were the least confident among home buyers. Specifically, the survey revealed that while between 68 and 75 percent of Millennial buyers expressed confidence regarding the overall mortgage process, types of loans available, the overall home buying process, and interest rates, only 35 to 46 percent of Gen Zers were confident with these aspects.
It makes sense why younger generations might be uncomfortable with the home buying process, as there are 23 potential steps to take from home buying to mortgaging. Working with a trusted professional in the industry can help buyers gain a better understanding of the processes and each step involved.
Confusion Around the Types of Loans
When it came to loans, many individuals in the survey expressed concerns regarding the different types, including:
• Conventional loans – Loans that normally entail a large down payment. These types of loans are popular among repeat buyers because buyers at that stage tend to have a more established credit history along with more funds available from selling the previous home.
• FHA loans – FHAs are loans that the Federal Housing Administration guarantees for first-time home buyers, permitting qualified borrowers to enter the market with a reduced down payment.
• USDA loans – USDA loans are intended for homeowners in suburban or rural areas through a qualified lender. The United States Department of Agriculture (USDA) guarantees these loans.
• VA loans – Veteran Affairs loans are geared toward veterans of the U.S. Armed Forces along with their spouses. The Department of Veteran Affairs is behind VA loans.
Understanding Interest Rates
Another source of confusion among many younger generations is the concept of interest rates. Today’s interest rates are among the lowest in history, which means that it’s one of the best times for potential buyers to enter the market. The reason behind the low-interest rates is because mortgage rates are decreasing as wages are increasing, which increases overall affordability and allows buyers to find a better home for less.
Ease the Home Buying Process with the Help of a Reliable Professional
If younger prospective first-time homebuyers are confused about any aspect of the home buying process, they can seek help from reputable professionals in the industry. Local real estate agents, advisors, and lenders can educate young buyers about every step of the process. With an expert behind them, people who are new to the market will be able to find the perfect first home and be more confident in their decisions.