For many, the mortgage process can be scary, but it doesn’t have to be!

1. Find out your current credit history & score – even if you don’t have perfect credit, you may already qualify for a loan. The average FICO^® Score of all closed loans in September was 724, according to Ellie Mae.
2. Start gathering all your documentation – income verification (such as W-2 forms or tax returns), credit history, and assets (such as bank statements to verify your savings).
3. Contact a professional – your real estate agent will be able to recommend a loan officer that can help you develop a spending plan, as well as determine how much home you can afford.
4. Consult with your lender – he or she will review your income, expenses, and financial goals to determine the type and amount of mortgage you qualify for.
5. Talk to your lender about pre-approval – a pre-approval letter provides an estimate of what you might be able to borrow (provided your financial status doesn’t change), and demonstrates to home sellers that you are serious about buying!

Bottom Line

• 40% of millennials who purchased homes this year have put down less than 10%.
• 76.4% of loan applications were approved last month.
• The average credit score of approved loans was 724 in September.

Some Highlights

Many potential homebuyers believe that they need a 20% down payment and a 780 FICO® score to qualify to buy a home, which stops many of them from even trying! Here are some facts:

• 40% of millennials who purchased homes this year have put down less than 10%.
• 76.4% of loan applications were approved last month.
• The average credit score of approved loans was 724 in September.

Some Highlights:

• 40% of millennials who purchased homes this year have put down less than 10%.
• 76.4% of loan applications were approved last month.

“We teamed up with Google to help us better understand what customers are searching for and how the home buying landscape is evolving. We found that millennials and first-time homebuyers are making a big splash in the market, and affordability remains top of mind.”

“It’s clear from the survey results that Millennials have a lot of anxiety built up about the home buying process. There is good news, however, as there’s more flexibility than most Millennials think regarding how to qualify for a loan and what’s needed for a down payment.”

Bottom Line

“Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”

Bottom Line

“Borrowers with Eagle Home Mortgage's Student Loan Debt Mortgage Program can direct up to 3% of the purchase price (up to $13,000) to pay their student loans when they buy a new home from Lennar, one of the nation's largest homebuilders. The contribution doesn’t directly increase the purchase price of the home or add to the balance of the loan.”

"Americans are more burdened than ever by student loans, with $1.3 trillion in outstanding student loans spread out among 42 million borrowers.   Particularly with millennial buyers, people who want to buy a home of their own are not feeling as though they can move forward. Our program is designed to relieve some of that burden and remove that barrier to owning a home."

Bottom Line

“If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter.”

“As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!”

Who is David Bach?

Bottom Line

“When getting help with money, whether it’s insurance, real estate or investments, you should always look for someone with the heart of a teacher, not the heart of a salesman.”

“While older generations rely on real estate agents for information and expertise, millennials expect real estate agents to become trusted advisers and strategic partners.”

Bottom Line

• “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
• The top reason millennials choose to buy is to have control over their living space, at 93%.
• Many millennials who rent a home or apartment prior to buying their own homes dream of the day that they will be able to paint the walls whatever color they'd like, or renovate an outdated part of their living space.

Some Highlights

• “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
• The top reason millennials choose to buy is to have control over their living space, at 93%.
• Many millennials who rent a home or apartment prior to buying their own homes dream of the day that they will be able to paint the walls whatever color they'd like, or renovate an outdated part of their living space.

Some Highlights:

• “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
• The top reason millennials choose to buy is to have control over their living space, at 93%.

“This survey revealed a powerful finding: Across demographic groups, homeownership remains a precondition of the American Dream.”

What about Millennials?

“Contrary to popular opinion, millennials who want to achieve the American Dream are 5% more likely than Baby Boomers to think homeownership is important. And two-thirds of millennial renters view homeownership as important to the American Dream. Although millennials are often portrayed as fickle and transient, they actually seek the stability of homeownership even more than their parents.”

Other Key Findings from the Report:

• Homeowners are 126% more likely than non-homeowners to view homeownership as a way to build wealth. Nevertheless, homeowners still overwhelmingly associated homeownership with a family living space.
• Homeowners are 24% more likely than non-homeowners to see homeownership as an achievement that reflects hard work.
• Millennials are 77% more likely than baby boomers to see a home primarily as a way to build wealth.
• Baby boomers are 98% more likely than millennials to see a home as a way to pass wealth down to children or family.
• Millennials are 29% more likely than baby boomers to see a home as an achievement that reflects hard work–an outcome we expected given that many millennials are still working hard to afford their first homes.

Bottom Line

“This survey revealed a powerful finding: Across demographic groups, homeownership remains a precondition of the American Dream.”

“About 72% of aspiring millennial buyers said they’re waiting because they can’t afford to buy…”

“Many potential home buyers are ‘disqualifying’ themselves. You don’t need a 750 FICO® Score and a 20% down payment to buy.”

So, what credit score is necessary?

Bottom Line

1. Equity Build-Up

“…homeowners who sold in the second quarter realized an average price gain of $51,000 since purchase — the highest average price gain for home sellers since Q2 2007, when it was $57,000. The average home seller price gain of $51,000 in Q2 2017 represented an average return of 26 percent on the previous purchase price of the home, the highest average home seller return since Q3 2007, when it was 27 percent.”

2. Projected Home Price Increases

3. Projected Interest Rate Increases

Higher PRICES + Higher INTEREST RATES = LARGER MORTGAGE PAYMENTS.

Bottom Line

Why the dramatic increase?

“Sellers 36 years and younger stayed in their home for six years…”

What does this mean for housing?

Why the dramatic increase?

“Sellers 36 years and younger stayed in their home for six years…”

What does this mean for housing?

Millennials are the most educated generation in the U.S.

“Our model shows that, all other factors being equal, the likelihood of homeownership increases by 3 percent for those that earn a bachelor’s degree over those with a high school degree. The likelihood of homeownership jumps another 3 percent for those that earn a graduate degree.”

Homes & marriage go together

Parents buy houses

“The homeownership rate is 1.7% higher for households with one or two children compared to households with no children, and it is 5.4 percent higher for households with three or more children.”

Wages and the economy

Bottom Line

“We were surprised to learn that online providers are not yet as big a disruptor in this sector as we first thought, despite purported cost savings. We found that millennials place a high value on the personal touch and knowledge of a local agent. Buying a home for the first time is daunting, and working with a local agent—particularly an agent referred by a parent or friend—could provide peace of mind.”

“While older generations rely on real estate agents for information and expertise, Millennials expect real estate agents to become trusted advisers and strategic partners.”

Bottom Line

Doug Duncan, Fannie Mae Chief Economist

“Positive demographic factors should continue to reshape the housing market, as rising employment and incomes appear to be positively influencing millennial homeownership rates.”

Diana Olick, CNBC

“Even as more homes come on the market for this traditionally popular sales season, they're flying off fast, with bidding wars par for the course. Home prices have now surpassed their last peak, and at the entry level, where demand is highest, sellers are firmly in the driver's seat.”

Daren Blomquist, Senior VP at Attom

"I am guessing we will see it get even better… If you are considering moving, it could be a really good time to sell."

Lawrence Yun, NAR Chief Economist

"The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home last month. Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings…for sales to muster a strong gain. Sales will go up as long as inventory does."

Mark Fleming, First American Chief Economist

“Despite higher mortgage rates, the potential for home sales increased on an annual basis driven by steady income and job growth, along with a surge in building permits. While it may be a little late for this spring, the increase in building permits is a welcome sign that some relief may be in sight for the inventory shortages that are holding back many markets from realizing their full potential this spring.”

Doug Duncan, Fannie Mae Chief Economist

“Positive demographic factors should continue to reshape the housing market, as rising employment and incomes appear to be positively influencing millennial homeownership rates.”

Diana Olick, CNBC

“Even as more homes come on the market for this traditionally popular sales season, they're flying off fast, with bidding wars par for the course. Home prices have now surpassed their last peak, and at the entry level, where demand is highest, sellers are firmly in the driver's seat.”

Daren Blomquist, Senior VP at Attom

"I am guessing we will see it get even better… If you are considering moving, it could be a really good time to sell."

Lawrence Yun, NAR Chief Economist

"The early returns so far this spring buying season look very promising as a rising number of households dipped their toes into the market and were successfully able to close on a home last month. Although finding available properties to buy continues to be a strenuous task for many buyers, there was enough of a monthly increase in listings…for sales to muster a strong gain. Sales will go up as long as inventory does."

Mark Fleming, First American Chief Economist

“Despite higher mortgage rates, the potential for home sales increased on an annual basis driven by steady income and job growth, along with a surge in building permits. While it may be a little late for this spring, the increase in building permits is a welcome sign that some relief may be in sight for the inventory shortages that are holding back many markets from realizing their full potential this spring.”

• ‘Millennials’ are defined as 18-36 year olds according to the US Census Bureau.
• According to NAR’s latest Profile of Home Buyers & Sellers, the median age of all first-time home buyers is 31 years old.
• More and more ‘Old Millennials’ (25-36 year olds) are realizing that homeownership is within their reach now!

Some Highlights

• ‘Millennials’ are defined as 18-36 year olds according to the US Census Bureau.
• According to NAR’s latest Profile of Home Buyers & Sellers, the median age of all first-time home buyers is 31 years old.
• More and more ‘Old Millennials’ (25-36 year olds) are realizing that homeownership is within their reach now!

Some Highlights:

• ‘Millennials’ are defined as 18-36 year olds according to the US Census Bureau.
• According to NAR’s latest Profile of Home Buyers & Sellers, the median age of all first-time home buyers is 31 years old.

“It seems that the long-awaited influx of millennial home buyers is beginning. Ellie Mae reported that mortgages to millennial borrowers for new home purchases continued their ascent in January, accounting for 84 percent of closed loans.”

“It is not surprising to see Millennial borrowers leverage FHA loans because they typically offer lower down payments and lower average FICO score requirements than conventional loans. Across the board, we're continuing to see strong interest in homeownership from this younger generation.”

Bottom Line

Don’t Become Trapped 

“Low rental vacancies and a lack of new rental construction are pushing up rents, and we expect that they’ll outpace home price appreciation in the year ahead.”

It’s Cheaper to Buy Than Rent 

“Housing is central to the health and well-being of our country and our local communities. In addition, this (rental affordability) crisis threatens the future value of owned housing, as the burdensome level of rents will trap more aspiring owners into a vicious financial cycle in which they cannot save and build a solid credit record to eventually buy a home.” “While more than 85% of markets have burdensome rents today, it’s perplexing that in more than 75% of the counties across the country, it is actually cheaper to buy than rent a home. So why aren’t those unhappy renters choosing to buy?”

Know Your Options

"It’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment.  It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.” (emphasis added)

Bottom Line

• “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
• At 93%, the top reason Millennials choose to buy is to have control over their living space.
• Many Millennials who rent a home or apartment prior to buying their own homes dream of the day that they will be able to paint the walls whatever color they'd like, or renovate an outdated part of their living space.

Some Highlights

• “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
• At 93%, the top reason Millennials choose to buy is to have control over their living space.
• Many Millennials who rent a home or apartment prior to buying their own homes dream of the day that they will be able to paint the walls whatever color they'd like, or renovate an outdated part of their living space.

Some Highlights:

• “The majority of millennials said they consider owning a home more sensible than renting for both financial and lifestyle reasons — including control of living space, flexibility in future decisions, privacy and security, and living in a nice home.”
• At 93%, the top reason Millennials choose to buy is to have control over their living space.

“Some high-earning millennials save money until they are in their early 30s to buy a place and just skip over that starter-home phase. They’ll stay in an apartment until they can afford to pay for the place they want.”

Bottom Line

"If millennials don't buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner to this day is 38 times wealthier than a renter."

"As a renter, you can easily spend half a million dollars or more on rent over the years ($1,500 a month for 30 years comes to $540,000), and in the end wind up just where you started — owning nothing. Or you can buy a house and spend the same amount paying down a mortgage, and in the end wind up owning your own home free and clear!"

Who is David Bach?

Bottom Line

“In 1984, 1994, 2000, and 2013, every time we have rate increases, we have increases in nominal home prices. We expect this to be more pronounced, as there is a big demand-and-supply gap at the present time.”

“The tightening labor market, rising wage growth, high levels of consumer confidence and a millennial generation with a pent-up demand for housing should allow the housing market to weather the storm of gradually rising interest rates.”

“Although we strongly believe that the housing supply-demand imbalance for single-family homes will continue to drive above-average home price appreciation, just as falling mortgage rates aided pricing power on the margin in recent months, we expect the opposite effect to become evident in the coming months. As such, we project year-end home price inflation of 4.8% for 2017 and 4.1% for 2018.”

“A modest increase in mortgage rates won’t have much of an effect on home purchases. A buyer may need to slightly re-evaluate which homes they can afford, but it’s not likely to make an impact on qualifying, in most cases.”

"Our survey data shows that mortgage rates would have to be significantly higher to have any meaningful impact. The house buying power that borrowers have, even with rates below five percent, still remains historically strong."

“In 1984, 1994, 2000, and 2013, every time we have rate increases, we have increases in nominal home prices. We expect this to be more pronounced, as there is a big demand-and-supply gap at the present time.”

“The tightening labor market, rising wage growth, high levels of consumer confidence and a millennial generation with a pent-up demand for housing should allow the housing market to weather the storm of gradually rising interest rates.”

“Although we strongly believe that the housing supply-demand imbalance for single-family homes will continue to drive above-average home price appreciation, just as falling mortgage rates aided pricing power on the margin in recent months, we expect the opposite effect to become evident in the coming months. As such, we project year-end home price inflation of 4.8% for 2017 and 4.1% for 2018.”

“A modest increase in mortgage rates won’t have much of an effect on home purchases. A buyer may need to slightly re-evaluate which homes they can afford, but it’s not likely to make an impact on qualifying, in most cases.”

"Our survey data shows that mortgage rates would have to be significantly higher to have any meaningful impact. The house buying power that borrowers have, even with rates below five percent, still remains historically strong."

Why the dramatic increase?

What does this mean for housing?

The National Association of Realtors (NAR) keeps historical data on many aspects of homeownership. One of the data points that has changed dramatically is the median tenure of a family in a home. As the graph below shows, for over twenty years (1985-2008), the median tenure averaged exactly six years. However, since 2008, that average is almost nine years – an increase of almost 50%.

Why the dramatic increase?

What does this mean for housing?

Bottom Line

The survey also revealed 3 key takeaways:

1. Those most likely to buy are ‘Older Millennials’ (ages 27-36) or ‘Generation X’ (ages 37-52)
2. Minorities, particularly African-Americans, were twice as likely to respond that they were considering purchasing a home this year than white respondents.
3. Many potential buyers believe they need to put 20% down and need to have perfect credit to own and are unaware of programs that would allow them to buy now.

“Having kids and raising a family is a primary reason why Americans take the leap into homeownership—many consider it a key component of the American dream.”

Bottom Line

Myth #1: “I Need a 20% Down Payment”

Myth #2: “I need a 780 FICO Score or Higher to Buy”

Bottom Line