To take advantage of low interest rates while home prices climb higher and higher, some homebuyers need help accumulating enough money for a down-payment. To satisfy secondary market loan package purchasers such as Fannie Mae and Freddie Mac and insurers like the Federal Housing Authority, lenders have strict rules about where down-payment money originates.
Lenders prefer that borrowers supply their own down-payment funds. It shows they have "skin in the game" and that they are good with money and can meet their financial goals. However, many homebuyers are turning to their parents, grandparents and other family or friends for help.
Research in from loanDepot LLC, found that more parents are planning on helping their Millennial-age kids buy homes. In the last five years, 13 percent of parents pitched in with down payments, covering closing costs, or co-signing the loan but lenders anticipate that fully 17 percent of parents will help their kids.
Because gifts are a gray area, lenders are requiring more documentation for down payment monies. For example, a parent may provide a few thousand dollars to an adult child to use as a down payment -- but is the money a gift or a loan“ Lenders may require borrowers and gift-givers to provide a certified down-payment gift letter or to sign an affidavit.
Because lenders require a paper trail, allowing parents to simply transfer money into the borrowers account to mix with the borrowers funds is discouraged. First, a large deposit raises the borrowers income and alters the bank statements, possibly allowing a borrower to qualify for a home that in reality is too expensive. And dont think underwriters wont find it. One of the first things they do is examine your bank accounts.
For FHA and VA loans, all of your down payment can be gift money. If your credit score is between 580 and 619, at least 3.5 of your down payment must be your own money. You can only use gift money on primary residences.
If youre planning to use gift money as part or all of your down payment, ask your lender how to meet the appropriate requirements.
Why Millennial Buyers Are Swiping Left On Your HomeWritten byJaymi NaciriPosted On Wednesday, 22 March 2017 20:16Pinterest
They want it fast, they want it easy, and it better be perfect. That pretty much sums up the typical millennial homebuyer today. So, if thats your target and your house isnt pristine, theyre going to move on to one that is. So how do you make your home swipeable“ Its easy, really.
Clean it up
"Whether or not we admit it, weve all seen at least a few of the home reality shows on channels such as TLC and HGTV. Those shows can be fun and informative, but they also do a lot to shape buyer expectations," said Bankrate.
That means millennial buyers - maybe more than any other demographic since they grew up in the age of House Hunters and flipping show marathons - will be expecting a house to be spic-n-span and well-staged. Award-winning home stager Torinbsp;Toth, author of the best-selling book,nbsp;FEEL AT HOME: Homenbsp;Stagingnbsp;Secrets for a Quick and Easy Sell, has some ideas that can be easily implemented to help a home sparkle, including staging your kitchen or your bathroom for under 1,000.
Consider the color
Are the walls of your home beige, gold, or something else in the Mediterranean family“ Go gray, instead. As weve seen countless times, most buyers have little vision when it comes to overlooking design issues, and may get hung up on something like a paint color, which keeps them from being able to really see the home. An outdated color may also give them the impression that the rest of the house is outdated.
"The new grays that have gained wide appeal have become a standard base for the millennial palette, along with more whitewashed gray variations, other soft neutrals and cooler whites influenced by Scandinavian deacute;cor," said the Chicago Tribune.
Dont be afraid to throw some modern wallpaper up in a space that needs a pop. It can make the buyer feel like time, effort, and care was taken to make the home stand out.
Focus on kitchens and baths
Weve been told for decades that kitchens and baths sell homes, and those spaces are top of mind for millennial buyers, too. But, while they may have ideas about what theyd like these spaces to look like, they may not have the patience, or the funds, to pay for them to be redone.
"The primary reason younger buyers seek updated kitchens and baths is because they have limited budgets," Jack Curtis, a Keller Williams real estate agent in Dublin, Ohio, told Bankrate. "Most of their savings will go toward the down payment and furnishings. Kitchens and bathrooms are also the most expensive parts of a home to update, and young homeowners cannot afford to sink a lot of money into those areas."
If youre going for a big renovation in the kitchen, taking down walls to open it up to the living space will reap rewards. Think: A large island with seating, stainless steel appliances, quartz countertops, and new fixtures, "which are especially important for todays young, budget-conscious buyers," said Curtis.
Go for luxury-ish
When considering options and materials, muse on this: "Anbsp;Monitoring the Futurenbsp;study by the University of Michigan showed a dramatic increase resulting in 75 of millennials noting that wealth was a very important life attribute," said Freshome. "Since millennials seem to value money and success, it only seems natural for them to flock to high-tech jobs that lead to wealth and success. nbsp;This life>
The takeaway is that millennials want a space to look rich. But that doesnt mean it has to put you in the poorhouse. Decluttering the space is one of the top tips of home stagers, and this will help create a minimalistic appearance that helps communicate luxury. A few inexpensive, high-end-looking details - a faux fur pillow on the couch, a gilded accessory, a marble-topped side table you pick up at Home Goods for 50 - can take it a step further:
Incorporate easy-care materials
Millennials may want the look of luxury, but they may not want the upkeep. "Most millennials want a turnkey home that needs little or no work. They spend long hours on the job and have many interests, and prefer materials and that require minimal care," said Mary Cook of national, award-winning commercial interior design firm Mary Cook Associates. "That means wood or tile floors, easy-care countertops and gas fireplaces. New products that reflect this are ever-more-functional engineered stones and tiles that mimic more luxurious surfaces, from marble to exotic wood. The model home interiors we create embrace furnishings that reflect these preferences."
Fashion a home office
Have an extra room thats serving as a guest space or a catch-all“ Pick up an inexpensive desk, position the guest chair in front, and now you have a home office. Today, millennials might reject your home altogether and fail to even come for a tour if they dont have a place to work from home. The words "home office" have to be in your listing.
Upgrade your tech
"One defining characteristic of the Millennial generation is that they grew up with technology," said Better Homes and Gardens.nbsp;"Many were lsquo;plugged in from the day they were born. To these individuals, technology is not just a luxury, but its a necessity. Your home needs to be technologically friendly in order to appeal to these buyers."
Making a few easy changes to add tech features to your home could go a long way toward making it irresistible to a millennial buyer. "Install a simple home automation system like a programmable thermostat that can be linked to your smart phone," they said.
Dont ignore the curb appeal
Making sure your home looks good from the street is universally important. But dont forget about the backyard. An annual Better Homes and Gardens survey monitoring "attitude and behavior trends of homeowners in the U.S." took a look at millennials and found that "more than three-quarters 77 say they want their outdoor living space to feel like a >
Take good pictures
Millennials are visual people. You only need to return to the Tinder analogy to understand that. Its more important than ever to make sure the pictures of the home are stellar. A baby boomer or Gen-Xer may be able to look past photos to come see a home that matches their needs. You may not have the same shot with a millennial.
Think carefully about how you promote the location
How far is the local Trader Joes Whole Foods, and Target“ Is there a popular shopping area or group of restaurants nearby“ Walkability is key for many millennials. Playing up these details in the home listing and marketing materials can go a long way toward attracting this target.
Play up energy efficiency
"With energy costs on the rise and growing interest in protecting the environment, young buyers are conscious of buying homes that are green," said Bankrate.
While many energy-efficient items may not necessarily be seen by the naked eye, expect millennials to "ask about the sustainability of your building materials and practices," said Pacesetter Homes. "They are committed to eco-friendly, energy-efficient homes - with ENERGY STAR appliances, programmable lighting and thermostats, and other high-tech, low-carbon-footprint amenities. Not only can they spell lsquo;LEED, but they want this building certification."
Got a fixer-upper“ Market it that way
Millennials may be turned off by a junky or outdated home masquerading as move-in ready, but if you have a true fixer-upper thats being sold as is, well, Hello challenge A millennial might be turned on by the idea of having a project, especially if they think theyre getting a deal.
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