Millennial Home Buying

Are millennials ready to purchase a house? Buying a home, especially for the first time, can definitely be terrifying. After all, it’s likely the biggest purchase of your life. With prices seemingly rising everyday, it certainly doesn’t make the process any easier. 

According to a recent survey done by Fannie May, most millennials wish to own a home. In fact almost 50% of those millennials said that their next move would be into a home of their own as opposed to a rental. 

The desire among millenials to own a home seems to be very strong. However, many doubt that they can afford to purchase one.They believe that the odds are stacked against them. Majority were affected by the late 2000’s recession and have pretty hefty student-loan debt over their shoulders. 

With all that said, there is hope and a lot of it. The first step should always be contacting a financial advisor and/or mortgage lender. 

Many millennials are simply unaware of all the tools they have at their disposal to ease the home buying process.

For example it is a common misconception that you must put down at least 20% on a home purchase. This is the number one hurtle as the majority of first time home buyers simply don’t have that cash on hand. As a first time home buyer, it is possible to put down as little as 3-5% down on a home purchase. Making the upfront cost of buying a home much more manageable. 

Speaking of upfront costs, there’s also those annoying closing costs that provide another obstacle. They vary from state to state and did you know that there are also different home buyers programs that different states offer? For example, the state of New Jersey offers a $10,000 grant for qualified first time home buyers. This can cover the closing costs all together for most starter homes.

Another fear is the loan to debt ratio. A mortgage, plus student loans leaves basically no money. This is where speaking to a lender or advisor becomes especially beneficial. There are many different aspects that go into mortgage costs. Insurance, mortgage rates, and taxes play a huge role. The good news is that mortgage rates are at a historic low, even for little money down, hence more reason to take advantage and lock it in. In terms of insurance costs and taxes, the areas that you’re looking in can be an influence.

One more option that is typically overlooked is buying a multi family home. A huge benefit of this is that you’ll be sharing the costs amongst your tenants. This way you can have a home at a very little cost or in some cases make a profit. Literally having someone else pay your mortgage. The best part is that you can still take advantage of the low down payment and mortgage rates.