Case Study #12 – Millennial First Time Home Buyers

I can literally scream out my lungs, saying ‘thank you!’ to the Moreira team. Today, I'm a proud house owner. I needed a lot of guidance on the mortgage loan application, and they saw me through the process. I was also privileged to secure the best mortgage loan deal. If I could give a 1000-star review, you bet I'll leave it. Many thanks!

charlie hCharlie H.

The Client

A millennial couple came to us as first-time home buyers.

  • Loan Type – Purchase
  • Program – Conventional
  • Sales Price – $300,000
  • Rate – 6.5%
  • Required Down Payment – 3%

Client Requirement

A young couple (first time home buyers) looking to purchase their first home together, while staying within a budget, in an area they’re already familiar with. This couple was already living together but unmarried with a fair amount of savings built up.

Loan Challenges

There were a few specific challenges to address in order to meet their needs while ensuring their payment stayed within a certain range, as well as keeping as much of their savings in tact as possible.

  • While it is a non-issue for a couple to be unmarried and purchase a home together, it does
    require us to separate their application; including application & disclosures, credit, income, etc.
  • Address the age-old question of whether to rent or buy.
  • Discussing with the clients the current market conditions of home prices & interest rates, and
    how that affects their decision of a starter home versus a more long term home purchase.

Our Solution

Our team spoke at length with the clients to address all of their concerns. The first challenge, their marital status, was a simple solution. We split their application so that they’re each signing separate documents, however, the mortgage and the title are in both of their names. In years past, younger couples were more geared towards a starter home; smaller in size, lower purchase price, with a plan to stay in the home between 3 and 5 years. Millennials are bringing an interesting outlook to purchasing their first home, especially given the current market conditions. As we discussed the pros and cons of renting versus owning, it became clear to our clients that purchasing was a better investment long term.

Even though this couple was entering the housing market at a time of elevated prices and rates, they are looking to stay in the home approximately ten years. After crunching numbers of rent payments for ten years and comparing that figure against their mortgage payment and equity obtained through their homeownership, the decision was easy.

The Results

After many discussions with us and their realtor, the couple was ready to hit the ground running. They were able to find a home with a purchase price of $300,000 and through negotiations between the buyers and listing agent, the seller agreed to cover the cost of a permanent rate buy down. By the seller covering the rate buy down, the clients were able to obtain a rate 1% lower than anticipated while keeping as much of their savings as possible. They found a home in the area they had already fallen in love with and we were able to get them into first their home in approximately 20 days!

  • Millennial couple in their 20’s were able to purchase a 3 bed, 2 bath home in an area they love with an affordable, fixed payment.
  • They will begin building equity in their 20’s all while having room to grow their expanding family, without a move to accommodate extra space.
  • We were able to get them closed quickly and into their first home with a payment only $350
    higher than their rent each month.
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