Kalamazoo MI Real Estate – Purchasing a home is one way that many Americans begin to amass wealth. We are noting that many millennials believe that they cannot buy a home because they have student debt. If you are a millennial with student debt, or if you are a parent or friend of a millennials, send this article to them. We want to make sure that these folks have the best information possible so that they can make wise decisions about their future housing.
There are a few myths that people seem to be believing and we would like to separate myth from fact.
Myth 1: Student Loans are Preventing Millennials from Buying
Buyers aged 18-34 years have comprised the largest share of first-time homebuyers at roughly 50-60 percent for the last few years. In 2016, buyers aged 25-34 years accounted for 56 percent of first- time home buyers, compared to 50 percent in 2005.
According to the National Association of Realtor’s latest Profile of Home Buyers and Sellers, the average age of a first-time home buyer in 2016 was 32. This generation will continue to be the topic of conversation A LOT when it comes to housing as more and more enter ‘average home buying age’.
The current homeownership rate for all Americans is around 63.7%. The homeownership rate for Americans under the age of 35 was most recently reported at 34.7%, compared to those 35-44 years old at 58.7%.
44% of homebuyers in 2016 had student loan debt at the time of purchase
59% of non-owners are not comfortable taking on a mortgage with their student debt according to the Aspiring Home Buyers 2017 survey. It is estimated that the college graduates have an average of $37,172 in student debt.
Myth 2: You Need a 20% Down Payment to Buy a Home
Since Millennials make up the largest share of first-time buyers, it should come as no surprise that 97% of this generation financed their home purchase, compared to 86% of all buyers.
What may come as a surprise to many who have not yet purchased, however, is that 16% of those who financed their home put 0% down!
61% of Millennials who purchased a home in 2016 put down 10% or less!
According to data from the last 12 months of Ellie Mae’s Millennial Tracker, the average down payment for a Millennial was 10%.
Your dream home could be within your reach much sooner than you ever thought if you only need to save up 3-10% instead of the 20% that you may have thought you needed!
Myth 3: You Need ‘Perfect Credit’ to Buy a Home
What is YOUR credit score? Wait, what is a credit score? According to Investopedia, “a credit score is a statistical number that depicts a person’s creditworthiness. Lenders use a credit score to evaluate the probability that a person repays their debts. Companies generate a credit score for each person with a Social Security number using data from the person’s previous credit history.
A credit score is a three-digit number ranging from 300 to 850, with 850 as the highest score that a borrower can achieve. The higher the score, the more financially trustworthy a person is considered to be.”
Over the last 12 months, the average FICO® Score for home purchases by Millennials was 721! There are many loan programs that require only a 640 credit score. Call the Veenstra Team at 269-350-5514 and we can direct you to a preferred lender who can work through the pre-approval process with you. Getting pre-approved is a FREE process and it will help you understand 1) whether you can purchase 2)
Don’t make the mistake of disqualifying yourself by thinking you need a 780 score.
According to a report by Trulia, “buying is cheaper than renting in 100 of the largest metro areas by an average of 37.7%.” That may have some thinking about buying a home instead of signing another lease extension, but does that make sense from a financial perspective?
In the report, Ralph McLaughlin, Trulia’s Chief Economist, explains:
“Owning a home is one of the most common ways households build long-term wealth, as it acts like a forced savings account. Instead of paying your landlord, you can pay yourself in the long run through paying down a mortgage on a house.”
Five reasons why owning a home makes financial sense:
5.Overall, homeowners can enjoy greater wealth growth than renters.
TAKE ACTION TODAY
Call the Veenstra Team at 269-350-5514 and we will be happy to provide a free consultation and guide you through the steps needed to determine whether purchasing a home is possible and right for you. If you are not able to qualify, then we can help you determine what you may need to do to qualify in the future. There are a few circumstances when buying a home is NOT the right move because of circumstances. If that is the case, we will let you know that. We want you to have the right information to make the best decisions for you and your future — even if that means we won’t be able to make a sale. We know if we treat people right, they will respect us and will refer others to us. We are eager to talk to you and to provide the information and guidance you need to make the wisest decisions for your future.
The Veenstra Team has also published a guide called the Home Buyers Handbook for Millennials that goes into a bit more depth on the info above. Send us an email or give a call and we will be glad to send you or your favorite Millennial a copy.
David Veenstra, REALTOR
Jason Veenstra, REALTOR (and Millennial)
Cindi Veenstra, Licensed office manager
Email: Sold at VeenstraTeam.com