Tim and Reina Robinson stand in front of their new house like proud parents with a newborn.
After carefully saving and managing their money, the first-time homebuyers closed the deal recently on a fixer-upper on a one-acre lot in the Tampa, Florida, area.
“This is what we’ve both worked so hard for,” says Reina, 27, a payroll administrator for her family’s business. “It’s really a dream come true.”
Millennial homebuyers like the Robinsons in their 20s and early 30s are beginning to make their presence known in the housing market in a major way, says Trace Kuhn, a mortgage consultant for Wells Fargo Home Lending, who worked with the Robinsons.
“Yes, we are selling to more and more older millennials now,” he says. “It’s partly because the economy’s better, and interest rates are still good. For some of them, though, it’s just the time in their lives for buying a home.”
Good habits pay off
For the Robinsons, buying their home in early August was the culmination of a lifestyle of healthy financial habits, says Tim, an emergency medical technician and home-improvement handyman. For several years they have focused on saving for a home, keeping tabs on their money, and living frugally.
“We immediately pay off whatever we buy with a credit card,” he says. “We have a mindset that if we really want something, we can wait until we can buy it with cash.”
That approach worked well in accumulating a nice down payment, he says, but it created a big snag to being approved for a mortgage. The issue was not Reina, who has an active credit card, car loan, and good credit score; her husband, however, had no consumer credit use at all — so when lenders pulled his credit score, it came up as “zero.”
Other lenders would only approve them for a higher-interest rate mortgage, Tim says.
Then the couple met with Trace, who says he knew how to help them get the mortgage rate they deserved. He worked with a vendor that produces specialized credit reports for customers who are considered financially responsible but don’t use enough credit to generate a traditional FICO score. The vendor compiled a nontraditional credit report, based on Tim’s timely bill-paying history, including rent, utilities, cable, and wireless service.
“All of that came together for them,” Trace says. “They’re first-time buyers who didn’t understand all the details of the process. They actually were very well qualified for a good mortgage rate.”
Trace was there for the couple every step of the way — from organizing documents and qualifying for the loan to financing it — Reina says: “We’re real thankful for that. Nobody else thought it could be done.”
Just getting started
Real estate experts have long expected a sort of coming out party for the millennial generation. In a survey by Realtor.com earlier this summer, 65 percent of respondents between the ages of 25 and 34 said they expect to buy a home within the next three months — up from 54 percent in January.
The number of first-time homebuyers — many of whom are millennials ages 25 to 34 — has grown to nearly one-third of total sales, the highest share since 2012, according to the National Association of Realtors.
And millennials are getting more certain of themselves as they navigate the homebuying process, according to Wells Fargo’s 2015 Homeownership Survey. Nearly 70 percent of respondents said they were confident of their knowledge about the process, up from 61 percent in the same survey a year ago.
In some ways, however, the party is just getting started, says Craig Coffey, head of marketing and e-business for Wells Fargo Home Lending.
It’s taking some time for millennials, in general, to hit their stride in the marketplace, Craig says. Many younger millennials, for example, are just out of college, developing careers, and forming households; so buying a house is not the foremost thing on their minds.
“We have not seen that huge surge yet from this generation, which is 70 million strong, second only to the baby boomers,” he says. “But we’re certainly beginning to see a glimpse of what is ahead of us.”