Some suggest that the millennial generation struggles with student debt which hinders their real estate timeline but not according to Nomura, an asset management company. In a recent article in Housing Wire:
“Nomura’s note to clients has a take few have offered: The first time homebuyers are holding out and it’s not student debt, a shift away from homeownership as a choice by Millennials, or any of that.”
Instead, Normura feels that there is a lack of understanding of the mortgage process and a perception that their just not ready yet! Further explained in the article:
” Analysts say it’s not that Millennials and other potential homebuyers aren’t qualified in terms of their credit scores or in how much they have saved for their down payment. It’s that they think they’re not qualified or they think that they don’t have a big enough down payment.”
A survey was published by Zelman & Associates that revealed the following percentages of the millennial generation feel that a minimum downpayment of 15% is required to purchase a home:
- 25-29 years old – 38%
- 30-34 years old – 42%
According to Christina Boyle, Freddie Mac’s VP and Head of Single-Family Sales & Relationship Management, in a recent Executive Perspectives piece:
- A person “can get a conforming, conventional mortgage with a down payment of as little as 5 percent (sometimes with as little as 3 percent coming out of their own pockets)”.
- Between 2009 and 2013 Freddie Mac’s purchase of mortgages with down payments under 10 percent more than quadrupled.
- In 2014 more than one in five borrowers who took out conforming, conventional mortgages put down 10 percent or less.
- Qualified borrowers can reduce their down payment coming out of their own pockets to 3 percent by grants or loans from non-profits or public agencies.
Ms. Boyle goes on to explain:
“Letting more consumers know how down payments are determined could bring more qualified borrowers off the sidelines. Depending on their credit history and other factors, many borrowers can expect to make a down payment of about 5 or 10 percent.”
The Bottom Line
Whether you’re a first time homebuyer or moving-up to a dream home, know ALL your options. By contacting Team Ardolino, a team of real estate professionals, you’ll be provided with the most up-to-date information about the real estate market and what direction fits your financial and real estate situation best. After all you may be pleasantly surprised by what your options really are!
Source: Keeping Current Matters