Do 46 Million Millennials Know They Are Mortgage Ready?

Many have written about the millennial generation and whether or not they, as a whole, believe in homeownership as part of attaining the American Dream. Millennials have taken longer to obtain traditional milestones than the generations before them, such as getting married, having kids, and buying a home. However, that does not mean that they do not still aspire to achieve those things. History shows that people tend to buy their first home around age 30. Nearly 5 million millennials will turn 30 in the next two years. This will continue to fuel demand for housing. This is also one of the many reasons why the millennial homeownership rate has continued to grow over the past few years. 48.4% of Americans between the ages of 30-34 now own a home. There are over 46 million millennials (33% of the generation) who are considered “Mortgage Ready”, meaning they meet the qualifications to be approved for a mortgage today! a FICO Score ≥ 620 a Back-End Debt to Income Ratio ≤ 25% no Foreclosures or Bankruptcies in the last 7 years no severe delinquencies in 1 year Rob Chrane, CEO of Down Payment Resource, commented on the findings of the report, “We now know there are millions of buyers with the income & credit necessary to qualify to buy a home. The biggest question is: Do they know it? …Unfortunately, many renters don’t investigate homeownership simply because they don’t believe it’s an option.” The good news is that more and more millennials…

Millionaire To Millennials: Don’t Get Stuck Renting A Home… Buy One!

In a CNBC article, self-made millionaire David Bach explained that: “The biggest mistake millennials are making is not buying their first home.” He goes on to say that, “If you want to build real financial security, real wealth for your lifetime, then you need to buy a home.” Bach went on to explain: “Homeowners are worth 40 times more than renters. Now, that first home doesn’t need to be a dream home, it can be a very small home. You might literally have to buy a small studio apartment, but that’s how you get started.” Then he explains the secret to buying that home! “Don’t do a 30-year mortgage. You want to take that 30-year mortgage and instead pay it off early, do a 15-year mortgage. What happens if you do a 15-year mortgage? Well, one, you pay the mortgage off 15-years sooner, that means you’ll be able to retire in your fifties. Number two, you’ll save a fortune (on potentially hundreds of thousands of dollars in interest payments).” What will it cost to pay your mortgage in fifteen years? He explains further: “For fifteen years, you got to brownbag your lunch. Think about that! Brownbag your lunch literally for fifteen years. You can retire ten years sooner than your friends. You’ll have real wealth, because you bought a home – you’re not a renter. And you’ll be financially secure for life.” Bottom Line Whenever a well-respected millionaire gives investment advice, people usually clamor to hear it. This millionaire gave…

Is Student Loan Debt A Threat to Homeownership? No!

Over the course of the last thirty years, a shift has happened. An entire generation has been raised to believe that a college education is their key to unlocking opportunities that were not available to their parent’s or grandparent’s generations. Due to this, student loan debt has soared to $1.5 trillion and represents the largest category of debt, surpassing credit card and auto loan debt in 2010 and never looking back. As more and more Americans continue their education amongst rising tuition costs, this number will no doubt increase. Many housing experts have blamed student loans for a drop in the homeownership rate for young families, and to an extent, they’ve been right. Increased debt at the time of graduation has no doubt limited young people from being able to afford a home at the same rate as their parents or grandparents did at the same age. In a recent Forbes article, the author explained that “in just the class of 2017, the average student has about $40,000 in debt — almost enough for a 20% down payment on a median-priced home.” The Federal Reserve set out to determine exactly how much impact student loan debt has had on the homeownership rate of those 18-34 (millennials). Their results found that, “Every $1,000 in student loan debt delays homeownership by about 2.5 months, but it doesn’t prevent homeownership entirely.  In fact, by the time college grads reach their 30s, those with student loan debt have a homeownership rate nearly identical to…

What is the Cost of Waiting Until Next Year to Buy? [INFOGRAPHIC]

Some Highlights: The cost of waiting to buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time. Freddie Mac predicts interest rates to rise to 5.1% by the end of 2019. CoreLogic predicts home prices to appreciate by 4.8% over the next 12 months. If you are ready and willing to buy your dream home, find out if you are able to!

Buying a Home Young is the Key to Building Wealth

Homeowners who purchase their homes before the age of 35 are better prepared for retirement at age 60, according to a new Urban Institute study. The organization surveyed adults who turned 60 or 61 between 2003 and 2015 for their data set. “Today’s older adults became homeowners at a younger age than today’s young adults. Half the older adults in our sample bought their first house when they were between 25 and 34 years old, and 27 percent bought their first home before age 25.” The full breakdown is in the chart below: The study goes on to show the impact of purchasing a home at an early age. Those who purchased their first homes when they were younger than 25 had an average of $10,000 left on their mortgage at age 60. The 50% of buyers who purchased in their mid-twenties and early-30s had close to $50,000 left, but traditionally had purchased more expensive homes. Many housing experts are concerned that the homeownership rate amongst millennials, those 18-34, is much lower than previous generations in the same age range. The study results gave a great reason why this generation should consider buying instead of signing a renewal on their lease: “As people age into retirement, they rely more heavily on their wealth rather than their income to support their lifestyles. Today’s young adults are failing to build housing wealth, the largest single source of wealth, at the same rate as previous generations. While people make the choice to own…

Homeownership Remains a Huge Part of the American Dream

As we head into 2019, many news outlets and housing experts warn that the housing market may slow down. Over the last six years, the inventory of homes for sale has been near historic lows, which has been the force behind increasing home prices. This has been great news for sellers as many of them have been able to capitalize on the demand in the market and sell their homes quickly and at a great profit. One of the big reasons why inventory has remained so low for so long is that an entire generation of home buyers is finally buying! The millennial generation (ages 19-35) has been the driving force behind bidding wars in many areas of the country as they ditch their renter lifestyles and put down roots in new communities. First American recently released a study entitled “How ‘Renter’ Millennials Will Transform the Housing Market.” In their study, they explained that: “…As more millennials age into their early-to-mid thirties, and begin to get married, have children and form households, they will continue to be the primary drivers of homeownership demand.” Because of this, it is safe to say that one aspect of 2019’s housing market that WILL NOT slow down is the demand for housing from young renters who are no longer satisfied living in someone else’s homes. According to the latest Housing Vacancies and Homeownership Report from the Census Bureau, home buyers under 35 are already out-buying older Americans. The chart below shows the year-over-year change…

Will Your Side Hustle Buy You a House This Year?

The top concern for most first-time home buyers is their ability to save for a down payment. According to a new survey, 36% of millennials took on a second job to make their dreams of homeownership a reality in 2017.  Among millennials with incomes over $100,000 a year, the top ways to come up with the necessary funds were to sell stocks (20%) or to sell cryptocurrency (16%). The most popular method of savings was the most traditional; 60% of those saving for a down payment used a percentage of their paychecks to achieve their goal, while 75% of those with salaries over $100k were able to save this way. For those who have not yet begun to save for their down payment, 32% plan on pursuing additional employment, while 15% plan on driving for a ride-share service as their second job. Many first-time buyers are mistaken about the down payment needed in today’s real estate market. In fact, “In a 2017 survey, 68% of renters cited saving for a down payment as an obstacle to homeownership. Thirty-nine percent of renters believe that more than 20% is needed for a down payment and many renters are unaware of low-down payment programs.” The many benefits of homeownership make the extra jobs, sacrificing new clothes, or skipping vacations well worth it. Bottom Line If you have been saving for your down payment for a while now and are curious how much further you have to go, let’s get together to help you…

Females Are Making It a Priority to Invest in Real Estate!

Everyone wants a place to call home; a place that gives them a sense of security. We are currently seeing major interest from females who want to achieve this dream, and the numbers are proving it! In 2018, for the second year in a row, single female buyers accounted for 18% of all buyers. In 2017, 60% of millennial women listed as the primary borrowers on mortgages were single. According to the 2018 Home Buyer and Seller Generational Trends Report by the National Association of Realtors, one in five homebuyers in the U.S. were single females (most of them part of the baby boomer generation) as you can see in the graph below: This does not come as a surprise since 50.8% of the U.S. population is female and 15.6% of them are 65 years and over, according to the Census Bureau. What are the reasons for this demographic’s booming interest in homeownership? Bankrate published an article with what they believe to be some of the reasons: Divorce rate: Known as the “Gray Divorce,” the divorce rate has doubled for those ages 50 and over and tripled for those ages 65 and over. Average life expectancy: For women it’s 81, four years longer than men. To build home equity: Women want to build equity through their home. As mentioned by Bankrate, “some are hoping to escape rising rents, some might be downsizing or looking for a new start,” especially those going through a gray divorce. Are they only downsizing and…

Still Think You Need 15-20% Down to Buy a Home? Think Again!

According to a new study from Urban Institute, there are over 19 million millennials in 31 cities who are not only ready and willing to become homeowners, but are able to as well! Now that the largest generation since baby boomers has aged into prime homebuying age, there will no doubt be an uptick in the national homeownership rate. The study from Urban Institute revealed that nearly a quarter of this generation has the credit and income needed to purchase a home. Surprisingly, the largest share of mortgage-ready millennials lives in expensive coastal cities. These cities often attract highly skilled workers who demand higher salaries for their expertise. So, what’s holding these mortgage-ready millennials back from buying? Myths About Down Payment Requirements!  Most of the millennials surveyed for the study believe that they need at least a 15% down payment in order to buy a home when, in reality, the median down payment in the US in 2017 was just 5%, and many programs are available for even lower down payments! The study goes on to point out that: “Despite limited awareness, every state has programs that provide grants and loans to make homeownership more attainable, with average assistance in various states ranging from $2,436 to $21,171.” Bottom Line With so many young families now able to buy a home in today’s market, the demand for housing will continue for years to come. If you are one of the many millennials who have questions about their ability to buy in…

Should I Buy Now? Or Wait Until Next Year? [INFOGRAPHIC]

Some Highlights: The cost of waiting to buy is defined as the additional funds it would take to buy a home if prices & interest rates were to increase over a period of time. Freddie Mac predicts interest rates to rise to 5.2% by the third quarter of 2019. CoreLogic predicts home prices to appreciate by 5.1% over the next 12 months. If you are ready and willing to buy your dream home, find out if you are able to!