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What millennials should know about the real estate market

Millenials are not just the dominant demographic in the workforce; they are now the fastest growing demographic of buyers in the real estate market. Having cleared their student loans, progressed in their careers, and possibly come into some inheritance, they are now ready to buy their first or even second homes.

Waiting in a seller’s market

The difficulty that presents itself to millennial buyers is that they are being pulled by two opposing forces. As the first generation to be truly internet savvy, they are very comfortable taking their time to do their research and shop around for the best deals. If you’re a millennial still living at home or recently moved back in, then there’s also no real urgent need to buy your home until you’re ready. This goes some way to discouraging quick buying.

However, home prices are on the rise and have been for a while. Much of the real estate market is a seller’s market. The longer you wait, the higher house prices climb and you may be worried you’ll soon be priced out of the market.

Though housing opportunities may come up that should be jumped on, rushing is rarely wise. Waiting gives you the opportunity to get advice, fix, or improve your credit, work out what it is you really want from a home, and then find it.

This is a fine balance, and really there’s no one simple answer for everyone as to whether you go for it now or wait. It will depend on every individual’s circumstances. To help you through a decision-making process, it might be a good idea to get help and advice from a real estate professional.

Minding your credit score and debt-to-income ratio

If you’re a millennial who has paid off their student debt and has saved some money, you’re in a good position to consider buying a home.

If you have yet to pay off your student loan, it is harder to get approval for a home loan. Any outstanding debts that you have will impact your debt-to-income (DTI) ratio. With considerable money owed and a modest income, banks or lending companies may consider you high risk. That translates to: how can you possibly pay off the mortgage on a home when you already owe so much – even if you do pay on time. The ideal debt-to-income ratio is “no higher than 36%,” according to

Another big factor in deciding whether you are successful in a loan application is your credit score. This is calculated using various factors such as how many lines of credit you have including how many hard applications you have made. Also, credit score is calculated on how diligently and timely your bill payments are. If you frequently pay late on bills or debt payments, you are negatively affecting your credit score.

If you go for a credit score check and find you’re scoring lower than 700, then it’s a good idea to start being more diligent about paying bills and debts. The sooner you start improving your record, the sooner you can get approval and even favorable interest rates for repayment.

There are many other considerations that need to be resolved when buying your home. If you are a millennial looking to get on the property ladder, there is help.

Get in touch with our associates at David DePaola & Company Real Estate in New Jersey. Call 609.731.0581 or send an email to david(at)depaola(dotted)com. You can also drop your message here.


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