Buying a Home in a Challenging Market

Kennia Gonzalez and Angel Vazquez

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Gen Z is bullish on homeownership and using first-time buyer mortgage products to turn the dream into reality.

The National Association of Realtors (NAR) says summer is typically the peak season for buying a house. However, the current higher mortgage rates and scarce housing options have made the process less appealing. Despite these challenges, data shows Gen Z buyers are some of the most active participants in the market today.

Born between 1997 and 2012, Gen Z is buying homes at a rate not seen since the post-war baby boomers were their age. NAR research shows that Gen Z represents only about 4% of the current home-buying market. But a study by Bankrate finds that within this small population, 30% have already bought their first home.

The NAR research also reveals Gen Z purchased the smallest properties, ones that are 1,500 square feet and smaller, and about 30% transitioned straight from living with their parents into owning their own homes.

Why is Gen Z bullish on home ownership and how are they affording it? We asked our mortgage experts in the Tampa area, Cadence Bank’s Cynthia Bencomo and Roy Muro, about this trend and also visited with recent borrowers Kennia Gonzalez and Angel Vazquez to get their thoughts.

Why is Gen Z motivated to buy a home?

According to Bencomo, community development mortgage loan originator, she’s seeing clients who prefer to invest in their future rather than pay rent.Kennia Gonzalez and Angel Vazquez

“Since they are just starting out and likely finishing college or trade school, student loans and car payments make up most of their debt. They are finding steady jobs to build up their income history but are earning entry-level salaries,” she said.

“Because of their lower salary levels, Gen Z borrowers have learned they may qualify for special bank mortgages (like Cadence’s Right@Home loans) and government programs that help first-time buyers with down payments, closing costs and fees associated with a home purchase. They aren’t shy about asking for assistance,” she said.

Such was the case with Kennia Gonzalez and Angel Vazquez, a couple in their mid-20s who recently purchased a home in Ocala, Florida, located about 100 miles north of Tampa.

“The cost of renting separately was about as much as the two of us buying a home together,” said Gonzalez. “We really wanted space, privacy and a place closer to the school where Angel works as a teacher, so we were excited to take the risk. We thought, ‘What’s the worst that could happen? They [the bank] could just say no.’”

What is the process for lower-income buyers seeking a mortgage?

Roy Muro, Cadence community development lending division manager, says a good rule of thumb for anyone seeking a mortgage is to get prequalified before starting to house shop.

“It’s during the loan qualification process that reality sets in. Borrowers learn just how far your money goes,” explains Muro. “During this stage, we check credit ratings along with work history and income stability. We also discuss options for building a down payment, like borrowing from other savings or getting help from parents or family members.”

Bencomo reminds borrowers that it’s never too early to talk to your banker. “Even if you aren’t ready right now, we can review things you should be doing now, like getting your credit in shape and understanding your debt-to-income ratio,” she adds. “This way, when you find the right house, everyone is prepared to act.”

That’s what Gonzalez and Vazquez did. They were referred to Cadence by their realtor but had first organized their finances to see what they could afford.

“Cynthia was a terrific communicator and gave us step-by-step guidance,” said Vazquez. “We had a rollercoaster of emotions while going through the home-buying process, but we stayed positive and stuck to our goal of owning a house.”

Aside from mortgage rates, what should a borrower look for in a lender?

Bencomo recommends asking what the application process looks like and making sure you have a positive connection with your banker. “Especially for first-time buyers like Gen Z or buyers needing down payment assistance, you should feel comfortable talking openly with your banker, because you’re going to be sharing a lot of personal information during this process.”

Even now, a few months after closing and moving in, Gonzalez sends Bencomo videos and pictures of the updates she’s made to the house. Most recently, she sent pictures of her updated closet.

“Now, shopping for a house has been replaced by shopping for the house,” jokes Martinez Gonzalez. “We enjoy video calls with our families back in Puerto Rico, showing them recent updates or just sharing a beautiful sunset.”

“We are so happy to be here and are so grateful and proud that we did it together as a couple,” concludes Vazquez.

And everyone at Cadence hopes they have many years and lots of joy in their own home.

Visit Cadence Bank to learn more about home loan products including low or no down payment mortgages.

This article is provided as a free service to you and is for general informational purposes only. Cadence Bank makes no representations or warranties as to the accuracy, completeness or timeliness of the content in the article. The article is not intended to provide legal, accounting or tax advice and should not be relied upon for such purposes.

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