Nearly half of prospective homebuyers born in the '80s till the mid-90s don't know where to begin.
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Renting isn’t viable for the long term, but it’s all millennials are comfortable with.
According to a survey by loanDepot, a nonbank consumer lender, half of the millennials (born between 1981 and 1997) are anxious about mysterious real estate costs and mortgage payments.
The driving forces toward homeownership are no longer wanting to pay rent and being ready to start a family — but those things don’t help overcome the worry.
“It’s clear from the survey results that millennials have a lot of anxiety built up about the home-buying process,” says loanDepot executive David Norris. “There is good news, however, as there’s more flexibility than most millennials think regarding how to qualify for a loan and what’s needed for a down payment.”
Even those who are ready to buy their own home have knowledge barriers. Over half (63 percent) of millennial renters are worried about affording a down payment, while 48 percent don’t even know where to begin the process.
The anxiety doesn’t stop there. Survey respondents also cited poor credit history (43 percent) and too much existing debt (38 percent) as other barriers holding them back from entering the market.
Millennial homeowners admit they were clueless
Even respondents with home mortgages (49 percent) acknowledge their struggles entering the housing market.
Of those with a mortgage, less than a third (27 percent) felt they were knowledgeable about the process when they began. More than half (55 percent) wish they had known more about interest rates, and 47 percent wish they knew about available loans. Nearly half (45 percent each) also would have preferred to better understand the preapproval process and what down payment they would need.
Many also didn’t realize there were a lot of costs beyond the down payment.
“When I’m working with today’s youngest buyers, I help them plan for all final costs, which can include HOA (homeowners’ association) fees, property taxes, private mortgage insurance (PMI) for those putting less than 20 percent down, title, appraisal, etc,” says loanDepot lending manager Marc Bui. “It’s important to understand everything that goes into closing so there are no unpleasant surprises.”
Googling doesn’t always work
If you don’t know something, the instinct is to Google it. That’s what 56 percent of survey respondents say they would do when diving into the housing market. More than half (54 percent) would also talk to their parents.
But there’s a lot of bad advice online, and when it comes to such a big decision — one of the biggest expenses you’ll probably ever have — you’re better off meeting with a professional.
“The best advice I have for young buyers is to not believe everything you read on the Internet,” says loanDepot lending officer John Pearson. “When talking with a professional, you can discuss your specific financial situation and the lending officer can help you determine how much down you’ll need and what a monthly mortgage payment will look like.”
Existing debt? Don’t fret
Millennials rank existing debt as a major deterrent to buying a home, but it’s not impossible.
For instance, mortgage backer Fannie Mae made policy changes last year to help potential homeowners who already have student loans or other debt. loanDepot says it’s now easier to qualify for a loan.
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Article last modified on February 13, 2018. Published by Debt.com, LLC . Mobile users may also access the AMP Version: Millennials Are Still Anxious About Buying Homes - AMP.