What All Millennials Who Want To Be Homeowners Need To Know
Money is a feminist issue — and yet, women are still reluctant to talk about it. According to a recent Bustle survey of more than 1,000 Millennial women, more than 50 percent of people said they never discuss personal finances with friends, even though 28 percent reported feeling stressed out about money every single day. Bustle's Get Money series gets real about what Millennial women are doing with their money, and why — because managing your finances should feel empowering, not intimidating.
Although a lot of Millennials rent apartments or rooms, more and more seem to be buying homes, too. Even though the thought of doing the latter may seem intimidating, it doesn't have to be. According to a 2017 online survey from Michigan State University and United Wholesale Mortgage, which surveyed 412 Millennials 25-to-34 years old — 50 percent who are homeowners and 50 percent who are potential home buyers. Of those wanting to own homes, 70 percent said that saving for a down payment is the biggest obstacle to achieving their goal of homeownership while 67 percent believed they needed to save up the full 20 percent down.
However, Mat Ishbia, president and CEO of United Wholesale Mortgage, clarifies the myth that most first-time buyers still believe they need to save up 20 percent for a down payment. For instance, there are plenty of low down payment programs, from three percent down to even 1 percent or 0 percent, he tells Bustle. One percent down is the equivalent of two months' rent in most areas, Ishbia says.
"Most Millennials aspire to be homeowners," Ishbia says. "A lot of what Millennials fear regarding homeownership is the unknown — things like the process and the qualifications associated with buying a home. They get misinformation from people about how much of a down payment is needed to afford a home. They shouldn’t fear the unknown. Millions of people go through this process every year and have success, and they should do the same thing."
Many Millennials Want To Buy A Home
Furthermore, the survey above found that many Millennials want to buy a home. Ninety-five percent of those surveyed said they're actively saving for a purchase, and 90 percent plan to buy within two years. And, if you think you can't invest in buying a home because of not making enough money or having too much student loan debt, think again. According to the survey, 25 percent of homeowners had an average household income under $50,000 per year, and 40 percent of homeowners had student loan debt when they closed on their homes.
If you're tired of renting and thinking of buying a place, here are some tips regarding what all Millennials who want to be homeowners need to know. After all, a home could be the most expensive thing you ever buy, but there are better ways of doing it than you may think.
1Look Into Low Down Payment Programs
Many survey respondents admitted that they're not sure they have enough money for a down payment on a house. Seventy percent said that saving for a down payment is the biggest obstacle to achieving their goal of homeownership. However, as I mentioned above, the putting-20-percent-down days are gone. Instead, check out low down payment programs — and, often, you can see your loan eligibility status right away. "There are government programs that require no money down, like VA and USDA loans," Ishbia says, "and there are conventional three percent down or one percent down programs. A lot of Millennials are paying more than that for rent every month. There is a lot of opportunity there."
2Fill Out Paperwork Electronically
"Millennials are interested in easy, fast, and convenient when it comes to getting a mortgage, but they also value customization," Ishbia says. "There are a number of doc-less products out there that are designed with the next generation of borrowers in mind. It can be easy to get a mortgage if you work with the right mortgage brokers throughout America."
3Get The Best Deal Possible
You may think it's a given that you should go to the bank you already have for your mortgage needs, too, but that's not necessarily true. "Banks do a bunch of different things without focusing on one thing in particular," Ishbia says. "Buying a home is a big deal. Go to a place that specializes in it. Go to a mortgage broker, not a mega bank or retail lender. Shopping for the best deal when getting a mortgage is important, and that's what a mortgage broker does for you — let them shop on your behalf and get the best deal possible. A mega bank or retail lender isn't going to be able to provide the best price for you."
4Make Changes In Your Spending Habits — Even Small Ones
As you may know, small changes in spending habits add up to a lot of savings. For instance, you can skip your daily Starbucks run and invest that money into your future house fund. "If you stop buying a daily $5 coffee for one year and put that $5 into a savings account instead, you will have $1,825 by the end of the year," Maggie Germano, Certified Financial Education Instructor and financial coach for women, tells Bustle. "In addition, bringing lunch to work ends up saving a ton of money! I know how tempting it is to go around the corner for some delicious, comforting Pad See Ew, but that takeout can run you at least $10 a pop. If you do that every weekday for the entire year, you end up spending over $2,500 on lunch! Think of the amazing things you could do with that money instead." Exactly! I asked female Millennials how much they spend on food every month, and it was definitely a LOT. But, the good news is, there are lots of savings tricks you can use to save more and spend less so you can finally start your house fund.
All in all, buying a house doesn't have to be the scary experience you may think it is. The worst that'll happen? You try the above and realize you cannot afford it just yet. But that doesn't mean you have to stop trying.
Check out the “Get Money” stream in the Bustle App for more tips and tricks on how to save and spend your money.