Whether it’s avocado toast, daily cups of coffee, European vacations, or a million other things, there is a ton of online chatter about the things millennials can cut back on, or give up altogether, in order to buy a home.
But are they content as renters? The media seems to think so. According to a survey from Apartment List, millennials in some of the largest metro areas will need to wait at least a decade to save up enough money for a down payment.
Other data and statistics fortunately tell a more positive story about millennials.
The median age for a first-time homebuyer has constantly been around 31 for the past 40 years. Additionally, millennials—people born between 1981 and 1997—are renting for a median rate of six years, only one year longer than in 1980.
We’ve also seen positive signs in the homebuyers we’ve serviced. Millennials accounted for 45 percent of our business during the first half of the year.
The big takeaway is that, contrary to popular belief throughout the media, millennials are interested in their piece of the American dream – like Gen Xers and baby boomers before them. They’re just not sure they can afford it.
In our recent millennial housing survey, 67 percent of respondents said that affordability is their biggest obstacle to owning a home. But these same respondents also believed they had to save enough money for a full 20 percent down payment—which isn’t true at all.
When told that it’s possible to purchase a home with a down payment as little as 1 percent, 96 percent of UWM survey respondents said they would be more likely to buy.
So, how can first-time buyers position themselves to make the most educated decision?
Separate fact from fiction. First-time buyers can often close on a home for as little as 1 percent, or roughly $2,000—which is the average price of a security deposit in the United States. There are many other ways to save for a down payment. Making small changes in your daily routine, like bringing lunch from home instead of regularly going out to eat, will help you reach your goal even faster.
Do your homework. Meet with an experienced independent mortgage broker in your area to determine your budget. Independent mortgage brokers have access to hundreds of different lenders and can help find the best program and rates, so you don’t have to do the legwork yourself. If you are not sure how to find a local mortgage broker go to FindAMortgageBroker.com.
Don’t wait. Now is the time to start. An experienced independent mortgage broker can help you with a budget and pre-approval so you can focus on the fun part: shopping for your dream home. But you’ll need to move fast—real estate is hot in many major markets and homes are selling quickly.
Mat Ishbia is President and CEO of United Wholesale Mortgage, a Troy, Mich.-based provider of mortgages for independent brokers nationwide. One of the nation’s leading advocates of independent mortgage brokers and wholesale lending, Mat has changed the lending platform, turning UWM into a $23 billion company and a top national workplace.