Homeownership in the Digital Age
May is Homeownership Month
Technology is a powerful tool. It can save time (via mobile payments) and money (comparison shopping has never been easier), and now it’s becoming a routine source of information, particularly among millennials, in the purchase or sale of a home.
More than 50 percent of buyers from all generations frequently used the Internet to search for their home, but that figure jumps to 93 percent for buyers 36 years and younger, according to the National Association of Realtors’ 2017 Home Buyer and Seller Generation Trendsreport. That’s worth noting because millennials (age 18 to 36) represent the largest share of homebuyers (34 percent), and two-thirds are first-time homebuyers.
There’s certainly a wealth of information about the home-buying process to be found online. The Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp. both have resources to help demystify the homebuying process. But having a working knowledge of the process, and available programs to assist first-time homebuyers, is a far cry from determining the right loan to meet a consumer’s unique financial needs and budget considerations.
The personal finance website NerdWallet found most consumers under 36 would prefer owning to renting, but postponed the purchase of a home because of real or perceived difficulties in affording it. That’s where a community bank like FNBC Bank comes in. Our expert lending staff can explain not only what you can afford and what to expect during the process, but other factors worth considering when determining the right time to buy a home.
For those who are ready, there are several options to consider in addition to conventional loans, including mortgages insured by the Federal Housing Administration. FHA loans represent 21 percent of the overall mortgage loan market, with millennial homebuyers comprising 35 percent of its customers. This might be because FHA loans only require a 3.5 percent down payment and typically have higher loan-to-value ratios and lower credit score requirements than conventional loans, though buyers eventually have to refinance their loans if they want to avoid paying private mortgage insurance for the life of the loan.
The U.S. Department of Veterans Affairs offers generous borrowing terms to servicemembers, veterans and surviving spouses, often requiring no down payment or mortgage insurance. While the VA has only a few requirements for things like debt and sufficient income, VA lenders may add their own additional requirements. According to the NAR, 12 percent of all homebuyers chose a VA loan, including 20 percent of buyers age 71 years and older.
In addition to available federal homeownership and home-buying assistance programs, there are numerous programs sponsored by state and local governments as well as other organizations that our lenders can recommend during our one-on-one to make homeownership more affordable.
If you’re not ready to purchase a home, FNBC Bank can highlight resources to help you create a budget and set financial targets so you’ll be well-informed and ready to take the plunge when the time is right.
During National Homeownership Month, FNBC Bank wants to remind you that we’re here to serve as a resource for home buyers.