Homeownership is part of the American Dream - and Millennials won't be killing that dream anytime soon.
A Millennial's Dream of Homeownership
At 24 years of age, Spencer Reese just became a homeowner. He purchased a two-bedroom, two-bath townhome in a Birmingham suburb. Spencer watched his spending while living in his parents’ home and saved for a down payment.
Spencer is not alone. For many Millennials (ages of 23-38 in 2019), homeownership is a priority as 90% of Millennials that are currently renting plan on buying a home in the future. Call it upbringing, most share their parents’ aspirations for a single-family home and want to be involved in their community and neighborhood.
In fact, the share of Millennial homebuyers closing purchase loans continues to rise. The Ellie Mae Millennial Tracker shows closed loan applications in the Birmingham metro areas at 37% for Millennials for the time period November 2018 - January 2019.
Even though Millennials face numerous challenges including tight credit, student loan debt and limited affordable inventory, Millennial homeownership rates are increasing at a faster rate than previous generations. All a good indication that ‘GEN Y’ is ready to buy.
Spencer shopped for homes within his price range for over a year, looking for the perfect house at a great price. Even though interest rates are still extremely low, price appreciation and a small uptick in rates were reducing his ability to meet his budget and his goal of making a 20% downpayment. So he decided to pull the trigger, knowing that waiting could cost him more money or less house. Or both.
Keeping the Dream Alive
His advice comes with experience, “Don’t automatically assume that student loan debt and little savings will disqualify you from obtaining a mortgage.” In most cases, only 1% of student debt is counted toward your debt-to-income ratio and many no or low down-payment programs are available.
“The important thing is to do your homework, keep an eye on your credit, and build a good relationship with your mortgage lender,” he adds. “I didn’t qualify the first time I applied, but my loan officer at MortgageRight took the time to explain to me what I needed to do to overcome a few obstacles. Sometimes all it takes is a gift from a family member.”
Let’s face it, Millennials have gotten a bad rap. Not only were they set up to do really well, they are smarter, can easily dominate most conversations and are masters at tech-wizardry. But then came a great recession, high unemployment numbers and all of this lead to higher student loan debt.
MortgageRight owner Tanner Allen said recently, “We find Millennials very hopeful and upbeat with a positive outlook, and cause-driven with a desire to make the world a better place. And I know this firsthand, because one of my partners is a Millennial!”
Contact MortgageRight at 205.776.8401 or Contact@MortgageRight.com for more information about buying your first home.
Sources: EllieMae Millennial Tracker, Realtor.com, Pew Research Center