The biggest stressor for many of today’s first-time homebuyers is home affordability, according to a new survey by LendingTree, an online mortgage lender.
LendingTree asked Americans who plan to purchase a home within the next two years a wide-ranging series of questions about their priorities, thoughts about the market and financial profile. In addition to finding homeownership to be a top priority among millennials, the survey also suggests that the want-to-be buyers would benefit from education about the mortgage closing process.
Key findings about first-time homebuyers
- Two out of three first-time buyers worry about the shortage of affordable homes. Most are looking for a home priced at $150,000 or less, and nearly 85 percent would consider purchasing a fixer-upper to cut costs.
- They underestimate how long the mortgage closing process takes. Nearly half think they’ll get to the closing table in 15 to 30 days – far less than the average closing time of 43 days.
- More than one in four first-time homebuyers have poor credit. Just 15 percent have a score of 740 or higher, and nearly two in five aren’t satisfied with their credit score. By contrast, more than 70 percent of repeat buyers are happy with their credit score.
- Low income and a lack of savings are the top two barriers to homeownership, and finding a home within budget is the most stressful part of buying a home for almost half of first-time shoppers.
- Almost one in four millennial buyers want to own a home before heading down the aisle, and 43 percent of first-time buyers across all age groups are single.
“Although the homeownership rate is lower among millennials than earlier generations at the same age … purchasing a home is still a significant milestone for many. However, strengthening your financial profile is crucial for those thinking of buying a home,” says Tendayi Kapfidze, chief economist at LendingTree.
“First-time buyers should prioritize strengthening their credit score and shopping around for the best mortgage rate,” she adds. “There are many programs available for those with lower scores, but buyers will save more money if they can raise their score, especially considering the potential difference in monthly mortgage payments over time.”
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