Young Couple being shown a new home by an estate agent holding a clipboard and paperwork. Low viewpoint. They stand looking at a digital tablet together

Do your research ahead of time to know the type of house you can afford in your area to manage your expectations. (Getty Images)

If you’re selling your home this year, it’s more likely than ever that you’ll hand over the keys to a millennial.

According to a report from Ellie Mae released in April, millennials represent 45 percent of all purchase loans, making them the largest age group in home purchasing for the first time. This is a noticeable shift for a generation previously known to prefer renting to homeownership. That said, there are a few roadblocks members of this generation will need to overcome before making the jump into a new home.

TD Bank’s recent Mortgage Service Index indicates that 90 percent of millennial respondents feel now is a good time to buy a home, and 51 percent said they intend to purchase a home within the coming year. This consumer confidence is likely a result of the current low interest rates.

But there’s a catch: Supply isn’t meeting demand. Respondents in the Mortgage Service Index cited inventory as the most common issue that homebuyers faced during their purchase decision (28 percent). On top of that, almost all millennials in the real estate market are first-time homebuyers, meaning that their unfamiliarity with the homebuying process risks making these issues even more difficult to tackle.

[See: 10 Secrets to Selling Your Home Faster.]

Still, there’s no need to be pessimistic. With a proper preparation and awareness of the right resources, homebuyers should feel ready to enter the housing market, regardless of age.

A Good Team Makes for Good Results

Despite the short supply, there isn’t a shortage of satisfaction. Seventy-five percent of Mortgage Service Index respondents said that their most recent homebuying experience was very good or excellent.

However, satisfaction with a new home is just as much about managing expectations as it is meeting them. Homebuyers should enlist the help of both a mortgage loan officer and a real estate agent. A loan officer can help set realistic expectations and identify the right products for an individual, so that they don't enter the buying process with an unrealistic vision of where their credit can take them.

Meanwhile, agents can help millennial buyers separate their needs – like being in a decent school district – from their wants – like granite countertops and hardwood floors.

Developing a good relationship with both of these sources before the homebuying process begins is an important step toward avoiding disappointment down the road.

[See: 8 Potential Headaches to Be Aware of Before Becoming a Homeowner.]

Plan and Save for the Unexpected

The down payment is never the end-all, be-all. The Mortgage Service Index found that one-third of homeowners incurred between $2,000 and $5,000 in unexpected costs throughout the homebuying process, while an additional 10 percent incurred over $5,000.

Replacing appliances, paying for inspections and appraisals and other miscellaneous costs can add up very quickly. Buyers must do their research and develop a clear picture of how to get to the closing table, and what to expect when they arrive.

Leave Nothing to the 11th Hour

In a competitive market, the ability to act fast when one finds the home of their dreams is crucial. Before embarking on the homebuying process, buyers should be sure to consult with their lender and real estate agent to line up the necessary paperwork for mortgage preapproval.

Should there be interest in the home from more than one party, the most prepared will always have an edge. Those who have applied for a mortgage and are preapproved will have a more legitimate chance of having their offer accepted.

Buyers with past credit issues may sometimes wish to avoid difficult conversations about their credit score. But this is one area where ignorance is not bliss. Going into the homebuying process without this knowledge is a recipe for disaster.

Buyers should check their credit score through one of the three major bureaus and ensure they’re in good standing before embarking on their homebuying journey. Avoiding large credit purchases that might raise an issue during the approval process is also a smart call.

[Read: 8 Things You Can Learn From a First-Time Homebuyer Bootcamp.]

Finally, first-time homebuyers may not be used to considering their spouse’s finances alongside their own. Couples moving in together shouldn’t let the old stigma of talking about money cause a rude awakening when they’re negotiating a purchase.

Millennials are currently blessed with a relatively favorable market as they become homebuyers, a far cry from the dismal economic projections that their generation once feared. As long as they take the proper steps to stay informed and prepared, their first homes will surely be happy ones.

Tags: real estate, housing market, mortgages, home prices, millennials, new home sales, existing home sales, pending home sales


Ray Rodriguez is regional mortgage sales manager for Metro New York at TD Bank. He is responsible for training and developing the mortgage sales team and growing the market share within his region. Ray has over 21 years of experience in the mortgage banking industry.

Recommended Articles

Best Places to Live for Quality of Life

Devon Thorsby | April 19, 2019

These metro areas offer the best education, access to health services and crime rates.

Why Spring Is the Perfect Time to Sell

Devon Thorsby | April 17, 2019

Spring is here and interest rates are low – it's a great time to make the most of eager buyers.

Home Selling: Real Estate Team vs. Agent

Dima Williams | April 17, 2019

Solo agents are an industry standard, but teams offer a novel alternative. Here's what sets the two arrangements apart.  

The Priciest Repairs for Homebuyers

Lisa Larson | April 16, 2019

Avoid the repairs that will cost you the most before you move in with a sharp eye and the right inspections.

The Best Places to Live in New York

Devon Thorsby | April 12, 2019

Find out where in the Empire State you'll find the best opportunities.

What’s Dragging Down Your Home's Value?

Devon Thorsby | April 10, 2019

Find out why your home isn't worth as much as you think.

Do Home Value Estimate Tools Work?

Teresa Mears, Devon Thorsby | April 10, 2019

Homeowners now have more control over how home value estimates are calculated.

DIY Projects That Add Value to Your Home

Mady Dahlstrom | April 10, 2019

These are the home improvement projects that will add value to your home when selling.

Are These New Hot Spots Too Expensive?

Devon Thorsby | April 9, 2019

In places where net migration is highest, housing costs are rising fast.

The Best Affordable Places to Live 2019

Devon Thorsby | April 9, 2019

When it comes to housing costs, these metro areas allow your paycheck to go further.

The 25 Best Places to Live in the U.S.

Devon Thorsby | April 9, 2019

These metro areas offer the best combination of jobs, desirability, cost of living, quality of life and more.

Why a Real Estate Agent's Advice Works

Steven Gottlieb | April 8, 2019

The advice your real estate agent offers can help you close the right deal to buy or sell your home.

Selling Your House in a Buyer's Market

Wendy Arriz | April 2, 2019

Five steps to ensure the right buyer sees your home.

Climate Change May Impact Home Values

Geoff Williams | March 29, 2019

With sea level rise accelerating, waterfront real estate values could be revalued sooner than you think.

How to Make Your Open House Memorable

Sally Forster Jones | March 28, 2019

How to prepare your home for a day of showings that will make buyers want to put in an offer.

What Is a BPO in Real Estate?

Devon Thorsby | March 20, 2019

Here's what to know about a broker price opinion, how it's calculated and if you should get one.

Are You Ready To Buy a Home?

Wendy Arriz | March 19, 2019

For the millennial generation, homeownership can still be intimidating. Here's what you should consider before making an offer.

Decorate Your Apartment on the Cheap

Devon Thorsby | March 15, 2019

A short lease doesn't mean you can't make your apartment feel like home.

What Data Points Tell You About Housing

Dima Williams | March 14, 2019

From home prices and sales to construction and mortgage rates, these are the real estate gauges to watch.

The Best Places to Live in California

Devon Thorsby | March 13, 2019

See how 12 metro areas in California compare to each other.