A new generation is entering the real estate market, and they are the Gen z-ers. As the eldest of these cohorts is entering their early twenties, they are slowly infiltrating the housing market for the first time. Though considered by the majority as quite young, this generation has already contributed more than $40 billion to the U.S. economy each year.
Who Are the Generation Z
The members of Generation Z comprise those born from 1997 to 2012. Hailed as the true digital natives, this generation is heavily reliant on technology. When planning to make a major purchase, most do their research first using their mobile devices before finalizing the purchase.
Viewed as more conservative than millennials when it comes to finances, Generation Z-ers would rather save their money than splurge items out of whim. In that same vein, they would prefer to save money in their home buying process. They are also more inclined to buy affordable yet functional homes.
Unlike the millennials, the majority of which distrust financial institutions and real estate agents, about 81 percent of Gen Z-ers plan to enlist real estate professional help in landing their first house. They are also more inclined to seek more deals than other generations.
Furthermore, they are more optimistic about the prospect of homeownership. The majority of this group believe they would purchase their first homes between 26 to 30. Like millennials, they also prefer suburban living. Nonetheless, only 17 percent would want to stay in the same place where they grew up.
Tips for Gen Z First-Time Homebuyers
Save up Early
There are major costs you need to consider when you plan on buying a home. These includes:
- Down payment
Depending largely on the type of mortgage you select and the lender, most first time home buyers with excellent credit scores are allowed a 3 percent down payment. Nonetheless, saving up for a small down payment can be challenging amid living expenses today.
- Closing costs
When you finalize your mortgage, you still have to pay some fees and costs. These expenses usually range from 2 percent up to 5 percent of the total amount of the loan. If it is possible, you may ask the seller to finance a portion of the closing cost.
- Move-in expenses
Your home buying expenses do not end when the house is finally awarded to you. You still need some money for furnishing, immediate home repairs, and upgrades in your new real estate property.
Know Your Credit Score
Your credit score can make or break your dream of buying your own house. If you are buying a home for the first time and have bad credit, consider rectifying your credit score. Opt to pay existing loans, pay your bills on time, and consider talking with your creditor.
Decide How Much You Can Afford
When it comes to financing your new home, you are setting yourself in trouble if you rely on your current budget. Instead, opt to create a new budget for your housing. Take time to make informed choices and decisions. Having a realistic budget helps you make your dream come true.
Compare Mortgage Rates
Lastly, opt to shop around for the best mortgage rate. Most first time home buyers are too excited to immediately put their money on the table after getting a quote from one lender. Comparing at least three quotes could even help you save over $3,500 in the first five years of your home loan.
Regardless of what generation you belong to, the whole home buying process is both exciting and emotional. Being a new member of the real estate market means you also need to learn the ins and outs of homebuying. With the help of these tips, may you land your dream home right away.