Millenial Homeownership Dreams CAN Come True!

I recently sat down with a lender I work closely with and we discussed a common trend we are seeing: millennials are struggling to make the leap into homeownership.  As a millennial myself, I'm well-aware of the concerns many younger people have about investing their money in property.  Fortunately, I'm also educated about the opportunities that are available to millennial home-buyers.  Here's a great article that discusses the issue of how myths about student debt are deterring young individuals from buying property, and how home ownership is absolutely still within reach for college-educated millennials!


Millennial Homeownership Dreams “Can” Come True!

There’s a new generation of homebuyers ready to put down roots in our communities. Born between 1982-2000, the Millennials are our nation’s largest living generation, surpassing the Boomers by a half million (and growing).

Ranging in age from 17 to 35, “mortgage-ready” Millennials (25-35) are thinking about their first home while the “near-ready” (17-24) are entering the credit market with their first credit card. 

Student Debt Myth

Over $1 trillion and growing, student loan debt is said to be one of the main reason Millennials don’t think they can afford a home. In reality, student loan debt makes up only four to seven percent of most Millennial’s monthly gross income, research suggests.

“The impact of student loan debt is not as high as other factors like home prices or income,” said Cynthia Waldron, Quantitative Director of Affordable Lending Analytics and Research at Freddie Mac. In fact, a recent study conducted by Freddie Mac and Experian, showed “that a large pool of Millennials, including many with student loans, are ready for a mortgage.” In particular, 75% of Millennials, ages 30-34, are mortgage-ready.

Freddie Mac Uses IBR Plan

To better accommodate actual student loan repayments, Freddie Mac confirmed that it will use the IBR payment to calculate Debt to Income ratios. Guidelines are subject to change.

Available since 2009, the Income Based Repayment (IBR) plan is a federal student loan repayment program that allows a borrower to limit the amount they must repay each month based on income and family size. Debt repayment under the IBR Plan is generally 10% of discretionary income for a new borrower accepted into the plan. In some cases, a borrowers payments could be deferred. Lenders then fall back to Freddie Mac forbearance guidelines and use 1% of the outstanding student loan debt unless a borrower provides documentation verifying payments are less than 1%.

Educate Borrowers

“There are many misconceptions about mortgage criteria among mortgage-ready individuals,” said Waldron. “They think [they] need 20% down and a really high credit score,” she adds.

“Many Millennials don’t know how to use credit as a tool. They may think not having a credit card is a good thing. What they may not realize is they could increase their credit score by using and paying off a credit card.”

“Through education,” Waldron concludes, “local lenders can help consumers in their communities recognize their mortgage readiness, student loan debt notwithstanding.”

Through a Veteran's Eyes : Making the Leap into Home Ownership

It’s no secret that U.S. military veterans make the ultimate sacrifice for the citizens of our nation.  These individuals fight to protect the rights and freedoms that all Americans enjoy, including the right to life, liberty, and the pursuit of happiness.  It’s for this very reason that I feel all veterans deserve to be homeowners and live the American dream that they fought for.  Many veteran first-time home-buyers, however, find that the path to home ownership appears to be mysterious and full of surprises.  I recently had the opportunity to work with my long-time friend and United States Marines Corps veteran Joe and his fiancé Chelsea to help them find and purchase their first home.  By taking advantage of the VA home loan program, which allows a U.S. military veteran to purchase a home with no money down, Joe was able to find his dream home and keep his savings in his bank account.  Joe was gracious enough to allow me to interview him after closing on his home in order to shed some light on the home-buying process for other veterans.


What was the biggest factor that influenced you to want to make the leap into home ownership?

“As a young couple starting out in life, Chelsea and I felt like we were throwing our money away on rent.  We wanted to feel like we were building equity and putting money into something that could grow and eventually be a significant asset for us.  Home ownership allows us to feel like we are investing our money into ourselves.”

What were your expectations before you started the process of buying a home?  Did you have any worries or fears?

“The biggest concern we had when beginning to look for a home was that we weren't going to be able to find what we wanted.  We didn’t want to settle.  We were patient, and we wound up being greatly rewarded as all of our needs were met in the end.”

What do you feel is the most rewarding thing about becoming a homeowner after having served in the military?

“When you serve in the military, you’re always controlled by someone else.  You’re told what to do, where to be, when to be there, and what to wear.  Now that I’m a homeowner, I feel like I can truly enjoy the freedoms that myself and all other veterans fought for.  I can do what I want on my property and enjoy life as I please.  It’s a very rewarding feeling and I have an increased sense of pride.”

Do you have any advice for other veterans who may be thinking of buying their first home?

“All veterans have a great opportunity available to them through the VA loan program.  You can purchase a home using no money down, which is a really big enabler for anyone who has served.  Don’t settle for less than you deserve.  If you’re currently renting or living with family, know that you can use your income towards investing in an appreciating asset.  Do your research, find someone reputable to work with, and go into the process with confidence.”

...I feel like I can truly enjoy the freedoms that myself and all other veterans fought for.
United States Marine Corps veteran Joe and his fiancé Chelsea couldn't be happier about their decision to make the leap into home ownership.

United States Marine Corps veteran Joe and his fiancé Chelsea couldn't be happier about their decision to make the leap into home ownership.

Austin's Real Estate Weather Report - September 2016

Check out the first episode of the Real Estate Weather Report, where I outline current market trends in the real estate world in YOUR area!  Just how hot is the market in your subdivision?  Find out by clicking below!

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