How Can Millennials Overcome Home Buying Hurdles?
Have you noticed there aren’t as many young homebuyers as there used to be? According to the Pew Research Center those born between 1981 and 1996 are not buying homes. A mere 36% of homeowners are younger than 35 years old, the lowest amount since 1982, when homeownership by age began to be tracked by the census’s Housing Vacancy Survey. People aged 65 and older have a higher rate of homeownership at 80%. However, that makes sense, since the longer you live, the more time you’ve had to save up and buy that house.
Are you a millennial wishing you were a homeowner? Are you afraid you’ll be living with your parents for all eternity? Do you wonder why you’re having a hard time getting a home loan?
Here are a few of the reasons it may be harder for you, as a millenial, to start down the road to homeownership:
1) Your student loans. Besides the economic hangover from the recession standing in the way of millenials and homeownership, are the obstacle of student loans. Your lender may not see your massive student loan debt as a problem when it comes to making a mortgage payment, but you may see it that way. Many millenials wish to pay off their school debt before taking on a mortgage.
2) You have no credit history. Without a credit history, lenders may see you as a risk. The best way to start helping yourself early on before buying a home is to establish credit.
If you use a credit card to establish credit, be careful as too much credit card debt can make mortgage lenders nervous. Also, don’t make payments late.
3) Your location is an obstacle. Did you graduate college and move to an area with a high cost of living? A high cost of living means homes are more expensive.
4) Your holding yourself back from home buying. Many millenials are ambivalent about buying because they don’t want to commit to one place. They like to keep their options open. If you’re planning on moving somewhere else eventually, you’re hesitant to put down roots anywhere.
Here are some tips for overcoming the obstacles to home ownership:
1) Think small when it comes to lenders. Use small banks and credit unions, preferably local. Smaller institutions can work around situations more easily.
2) Consider an FHA loan. These loans are for first time homebuyers and insured by the Federal Housing Administration. You will most likely need a down payment of at least 3.5 percent and a credit score of at least 580-600. The downside to these loans is that you will pay more in insurance premiums than you would if you took out a conventional loan.
3) Shop around. Ask about loan programs and look for the best rate.
Still can’t get a loan, well at least you’re not alone. If you get rejected, just keep trying to improve your financial picture and remember, you’re not the only one.
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