Millennials are in between 18-35 years old today, and at the prime age to enter the housing market. Despite their interest to become homeowners, there may be some obstacles along the way stopping millennials from searching deeper into the home buying process. Understanding which issues they may face will help direct this generation towards solutions that will encourage them to pursue homeownership.
Dealing with student loan debts: According to cometfi.com, 1 in 4 Americans, ( an estimated 44 million people), have student loan debts averaging a total of $37,172, and monthly payments of around $393. Millennials with student loans to pay off may not even be considering the thought of buying their own property as they fear to have additional monthly loan payments towards a house/ apartment, and because they are still establishing a good credit score. It is vital for professionals, i.e: financial advisors and loan officers, to reach this audience and open a door of options for people 18-35 to explore. Millennials hesitant to begin understanding their future in the housing market may be surprised after meeting with a loan specialist: Speaking with an expert can help those in debt learn more about feasible mortgage avenues to take with the potential to make them homeowners sooner than they would think.
Buying a home usually requires a large investment. The big numbers involved in becoming a homeowner can be intimidating, especially for millennials who are still developing their career paths and working on establishing a steady and reliable income. Thus, when thinking of looking for a home to purchase, the first few questions that come to mind are:
“How much money are we talking about? Will this fit into my budget?”
“Can I afford the mortgage with the job I have/ will have during the loan term?”
If millennials are asking themselves these questions, it means they’re off to a great start, and ready to dive into the journey of discovering a place in the housing market. According to census.gov the average price for a single-family home in June 2018 was $363,300. This home price would require monthly mortgage payments of around $1,800 with a 20% down payment. This can be a hefty responsibility for millennials to assume, as this also discludes closing costs, insurance, property taxes, and additional moving expenses. Realizing the amount of required payments and fees needed for a loan may deter new home buyers from allotting their income for a mortgage, as they fear not having sufficient funds for other needs- such as shopping, traveling, and miscellaneous spendings.
Additionally, the millennial generation is geared more towards freelance jobs that do not always provide a stable salary they can depend on, making them unwilling to make any big financial decisions yet. A self-starter entrepreneur also tends to live a more flexible lifestyle that leads to more traveling and remote work days. Given this scenario, millennials in this position may not feel comfortable setting aside savings for a home until they develop their businesses further.
This generation is mostly motivated to excel at their self- employed, or corporate careers- driving themselves to work hard, expand their skill set, search for growth opportunities, and envision a successful future, which includes owning their own home. Therefore, regardless of budgeting concerns, as a loan expert, you can guide any apprehensive client through the beginning stages. Help millennials, who are still establishing their financial lives, determine the facets of applying for a mortgage, and help foster an understanding of achievable homeownership possibilities. Review mortgage rates, terms, housing costs in preferred locales, and budgets to analyze what home price range they can afford.
Location, location, location: If the area of choice is expensive and over budget, present other neighborhoods with more affordable options for a starter home that will still provide a desirable experience.
Exploration and inquiring with experts is our best advice to give to anyone apprehensive to enter the housing market due to financial circumstances. By beginning the quest and analysis of what it takes to buy a home with a loan specialist people will feel more at ease knowing they have an experienced person providing guidance and assurance during the mortgage process.
If you relate to the above whereabouts, there are ways to overcome the worries and push away the negative perception that having debts, and working in a position that is evolving financially impedes you from becoming a homeowner. Our team is specialized in addressing doubts and finding custom solutions for each person’s unique situation. If you have any thoughts, questions, or concerns that you feel are stopping you from buying your first home, reach out to our qualified and skilled loan officers at A&D Mortgage to see how we can help you conquer your fears of mortgages, and lead you on a path of personalized approaches.