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What Does Home Buying Look Like for Gen Z? 

March 16, 2022

What Does Home Buying Look Like for Gen Z? 

While millennials still make up most of the current home-buying demographic, Gen Z’ers also have their eyes set on future homeownership. In fact, 43% of Gen Zers plan to buy their first home within the next 5 years. 

So, if you’re a Gen Zer, what does buying your first home look like? How do you qualify and plan for this next stage of your journey? Read on because we’ve got all you need to know to plan for homeownership and ease any first-time home buyer anxiety. 

Gen Zers Are Looking Into Homeownership

Despite the current economy, Gen Zers, with birth years 1997-2012, remain optimistic, with 87% of respondents viewing homeownership to be at least somewhat important to them — a rate similar to millennials.

Gen Zers are now considering homeownership for many reasons, including the historically low mortgage rates, being homebound due to the Covid-19 pandemic, and recognizing their own increasing space needs. They see homeownership as a way to build generational wealth, and they may be more attuned than other age groups to the emotional side of owning their own home. 

The Benefits of Homeownership for Gen z

Build Wealth

If you’re not good at saving money each month, a mortgage essentially does it for you. As you pay down your mortgage principal, you increase your equity, adding to your net worth. Further, homes are tax shelters, meaning that you may get deductions on mortgage interest, mortgage discount points, mortgage insurance, and property taxes. Reducing your taxable incomes lets you keep more money in your pocket. 

Stability

When you rent, you’re susceptible to fluctuating prices that can change each year. Mortgages — particularly fixed — allow you to pay a consistent amount over the life of your loan. This keeps your monthly mortgage payment predictable and manageable, allowing you to save more of your money for other investments or living expenses. 

How Gen Zers Can Prepare for Homeownership

So, how can a Gen Zer get ready to buy a home?

Improve Your Credit Score 

One of the first things you can do is get your credit score as ready as possible. This score helps mortgage lenders see that you’ll be able to pay your loan back, so, typically, the higher your credit score, the more favorable your mortgage rate. However, you should work with a mortgage lender like The Mortgage Firm Gainesville that offers loans that may accept lower credit scores, such as FHA, VA, or USDA loans. 

To stay on top of your credit score, get a copy of your credit report and check it for errors. If you see them, address them early as they sometimes take weeks or months to resolve. The most significant things that negatively affect your credit score are payment history and revolving debt balances. 

Be Aware of Your Debt-to-Income Ratio (DTI)

This number can be important when applying for a mortgage and refers to your monthly debt divided by your gross monthly income. If you’re looking to lower your DTI, consider doing the following.  

  • Pay off any car loans you have. 
  • Lower your credit usage.
  • Consolidate current loans, if possible.
  • Consider using a co-borrower, but be aware that their credit score will also affect your mortgage application. 

Let The Mortgage Firm Walk You Through the A-Zs of Homeownership.

The bottom line is that homeownership is related to income, not age. That’s why at The Mortgage Firm Gainesville, our team focuses on meeting our customers where they are to give them the best service possible. We offer technology that helps minimize the stress of home buying. For example, we leverage technology to streamline the mortgage qualification and verification process. We are also available to our customers beyond regular business hours because we know that convenience and availability matter. 

No matter where you are in your home buying journey, we are here to guide you with transparency and resources that help you feel empowered to choose the mortgage that works best for you and your family. Reach out to us today to find out how we can make your homeownership dreams come true.