Jul 26, 2016
A common myth in the real estate industry is that the millennial generation is breaking tradition of their predecessors when it comes to home buying. One assumes that millennials are either living at home, renting longer or simply overwhelmed with student loan debt. It would appear millennials are uninterested in homeownership or feel they are unable to purchase a home.
However, a recent NerdWallet survey showed data collected from government and private organizations that found many of these myths to be untrue. At least two-thirds of young renters said that it is a good time to buy and many believe that owning a home vs. renting is a better decision, both for financial and lifestyle reasons. According to Fannie Mae – the leading source of financing for mortgage lenders – millennials born between 1981 and 1997 look at owning a home just as positively as previous generations.
Although research shows that many millennials would prefer to own a home, it appears they are postponing homeownership because of real and perceived difficulties in affording it.
Younger renters cited a down payment and closing costs as a common reason for not buying. However, many of these millennials are unfamiliar with how much is needed to purchase a home. Seventy-three percent of those surveyed were unaware of lower down payments options – ranging from 3-5% of the homes purchase price, compared with the perceived lender preference of 20%.
In today’s market, many mortgage lenders will underwrite loans as low as 0-6% down payment for first-time homebuyers. RealtyTrac, a provider of housing data and analytics for real estate and financial services – estimates about 30% of homebuyers put down 3% or less.
Millennials should never assume that they cannot afford a home. Although certain realities can hinder one’s ability to becoming a homeowner, many of those roadblocks can be overcome and branch from a person’s lack of knowledge of the options available.
The first step to owning a home is knowing how you’re going to finance it. By researching different loan options and speaking with a mortgage lender, you may realize that buying a home is more of a possibility than you thought.
Led by third-generation owner Stafford Manion, Gladys Manion, Inc. is a boutique agency specializing in luxury St. Louis real estate along the central corridor.