Gen Z is coming into its own. Members of the youngest adult population in America are taking their place in the culture. For many, that means buying a first home and starting a family. But how to go about financing that home? More importantly, what can Gen Zers do to make lining up a mortgage easier?
Perhaps making it easy shouldn’t be the goal. A better goal is to ensure that the mortgage process is successful. Easy doesn’t help if a buyer ultimately fails to secure the funding to buy a house.
As a Colorado home loan specialist, we frequently have opportunities to work with Gen Z homebuyers. We take every opportunity seriously. We treat every buyer like we would expect to be treated. That being the case, we have some tips we can offer first-time Gen Z homebuyers in Colorado.
1. Run a Financial Audit
Everything about the mortgage process is going to be built on a buyer’s current financial position. Put another way, a buyer’s current finances will determine everything from loan eligibility to the lenders willing to offer a mortgage. We say this to encourage Gen Zers to audit their own finances.
A comprehensive financial audit looks at a host of things, including:
- Cash Position – Homebuyers of every generation are expected to have at least some cash to put into the deal. We’re talking down payment and closing costs. A small number of no-money-down mortgages exist, but they are hard to come by. Not everyone qualifies.
- Income – Of course, income is a big part of the equation. Homebuyers need to be honest about how much they earn, how stable their income is, and any future plans to change employment.
- Debt Load – It helps to honestly assess debt loan. Banks look at something known as the debt-to-income ratio. If the ratio is too high, getting a mortgage could be challenging.
Underscoring a financial audit is being realistic about one’s credit. A poor credit history combined with a lower rating will make obtaining an affordable mortgage much harder. Sometimes it is worth holding off on buying long enough to improve one’s credit.
2. Establish a Budget
Establishing a budget prior to applying for a home mortgage goes a long way toward ensuring a smooth experience. There is no point in applying for an unaffordable mortgage on an unaffordable property. A budget tells a buyer how much they can afford to spend. Sticking with that budget avoids unnecessary letdowns.
3. Obtain Pre-Approval
One of the most important things Gen Z buyers can do to ensure a pleasant mortgage experience is obtain pre-approval. Pre-approval is essentially a commitment from a lender to write a mortgage for a certain amount and at a certain interest rate. Not only does pre-approval streamline the application process, but it also gives buyers leverage when it comes time to make offers.
4. Work With a Mortgage Broker
Our last tip is something we always recommend – working with a mortgage broker rather than going directly to lenders. It is a broker’s job to contact multiple lenders, get offers, and compare those offers before presenting a buyer with the best choices. The broker more or less does all the heavy lifting. Buyers are spared the time and frustration of having to shop around.
Gen Z homebuyers in Colorado have plenty of options for mortgages. If you are among them, we invite you to contact Mortgage Maestro before you start looking at houses. We are Colorado home loan specialists more than capable of helping you get into your eventual dream home.
