The difference between a first-time homebuyers and first-generation homebuyers is that first-generation buyers are the first in their families to own a home.
Not only is buying a home one of the best financial moves one can make, but there is also non-financial benefits of owning a home. For many first-time homebuyers, and especially first-generation buyers, there will be an overwhelming sense of pride and security. The simple fact around owning real estate is that there is an indescribable feeling of success when purchasing a home. According to the Head of Neighborhood and Community Lending for Bank Of America, AJ Barkley:
“Achieving this goal can create a sense of pride and accomplishment that resonates both for the buyer and those closest to them, including their parents and future generations.”
Here is some advice for first-generation home buyers in today’s seller’s market.
Use Your Professionals
We will continue to beat this point home, but it is wildly important. Hiring a real estate professional is one of the smartest moves to make when buying a home for the first time. The importance of reaching out to a trusted advisor in your homeownership journey is often overlooked. However, having an expert in your corner from the beginning is a great way to navigate waters that you may know nothing about. These real estate professionals are here to help you find your dream home, as well as serve as an expert advisor for the process.
According to the latest Profile of Home Buyers and Sellers from Association of Realtors (NAR), there are a few leading ways that real estate professionals help first-time and first-generation buyers. Not only do they help their clients find their homes, but they also help with other aspects. Check out this chart from Keeping Current Matters for the full breakdown of the NAR survey.
Research and Affordability For First-Generation Homebuyers
The next piece of advice we are wanting to give first-gen buyers is to know your numbers. In our real estate blog, we have talked about the importance of knowing your finances. Not only does this let you know what you can and cannot afford, but knowing them will also help the pre-approval process. In one of our recent articles, we laid out the mortgage process and what buyers should do to be ready. And if you are a single homebuyer, knowing your finances is two times as important because you are alone. Reach out to your real estate professional if you need to find a qualified lender.
One of the biggest misconceptions from first-time buyers is the down payment. Many buyers believe that they need to obtain a 20% down payment. This is not the case, as there are many separate loans that do not require 20% down. However, 20% equity is when PMI is taken off your payments, which will save money over time. Freddie Mac says:
“The most damaging down payment myth—since it stops the homebuying process before it can start—is the belief that 20% is necessary.”
Final Bit Of Advice For First-Generation Homebuyers
The third and final bit of advice we will give you is keep in mind what you are looking for in a home to begin with. During the pandemic, buyer’s needs changed dramatically. Your needs for a home might have as well. Many buyers nowadays are looking for homes with office space or extra rooms to accommodate for all the extra time we have been spending at home.
Unproportionate to move up buyers, first-generation buyers do not always recognize the financial and non-financial homeownership benefits. However, many first-generation buyers are beginning to realize the true benefits of owning a home. According to a recent survey from Keeping Current Matters:
- 73% of first-generation homeowners say the safety and security homeownership provides is increasing in importance.
- Nearly two-thirds of first-generation homeowners say the importance of building equity in a home is growing more important as well.
And as AJ Barkley explains,
“For many first-generation homeowners and their families, homeownership has a unique importance, given the collective efforts to overcome financial challenges that can often span generations…”
Whether you are a first-generation buyer, first-time buyer, or any other type of buyer of real estate, it is important to remember all the aspects of the process. Knowing your numbers, knowing what you want, and most importantly, working with professionals, will help your dream become a reality. Reach out to us at Premier Homes Team if you are looking to buy in this ever-changing market.