Get Your Millennial Out of Your Basement

Are you ready to be an empty nester? We’ve got some tips on how to get your millennial out of your basement and into their first home.

Buying a home? Click here to perform a full home search

Selling a home? Click here for a FREE Home Price Evaluation

We’re covering a very important topic today: how to get your millennial out of your basement and into their first home.

The key is knowing how to overcome potential roadblocks your millennial might see in purchasing a home. The biggest roadblocks they see are the down payment and the closing cost fees. In reality, these things are more like hurdles than roadblocks.

Down payments, for example, are not as terrifying as one might think. Millennials think they will need to put anywhere from 5% to 20% down, and that’s simply not true. There are loans available to help first-time buyers. For example, an FHA loan only requires 3.5% down, some conventional loans only require 3% down, and there’s a USDA loan that’s available to many that requires 0% down. Also, if you have access to the VA loan, that is 0% down as well.

“

There are lots of programs that help 
first-time buyers.

”

There are also many down payment assistance programs out there that millennials can take advantage of.

Closing costs are not as scary as one might imagine, either. There are ways to overcome that hurdle as well. Your millennial could ask the seller for closing cost assistance or get a gift from a relative. They can also talk to their lender about options to soften the blow of closing costs.

When it comes to millennials, it shouldn’t be a matter of if they can buy, but rather when they can buy. We find that most can buy right now.

If you have any other questions, please feel free to reach out by giving us a call or sending us an email. We look forward to hearing from you!

Why Are Millennial Buyers Afraid of Buying a Home?

Many millennials hesitate to enter the real estate market because they fear another housing crash. However, the market won’t crash like that again, and there are a few reasons why.

Buying a home? Click here to perform a full home search

Selling a home? Click here for a FREE Home Price Evaluation

Many millennials have fears about homeownership because they felt the devastating effects of the 2007 housing crash firsthand. Millennials watched their parents lose their homes, and many fear that it will happen again.

If you want to move your millennial out of your basement and into homeownership, let them know that it’s impossible for the market to crash in the same way that it did in 2007.

One huge reason that the market crashed back then was the loan availability standards dropped so low that just about anybody could get a loan. People could claim that they earned $100,000 a year and no one would verify their income. As a result, most people purchased homes that they couldn’t afford in the first place.

These days, it is more difficult to get a loan than it was during the housing boom. If you look at the mortgage credit availability index, you will see that it’s more difficult to get a loan today than it was back in June of 2004. Restrictions are much higher now, which means that the people getting loans for homes can actually afford to make the payments.

When you look at homeownership from an investment perspective, even the most conservative experts predict that your home will appreciate 9.9% by 2020. Optimists predict that homes will appreciate by 24.7%. Ultimately, you should see an average appreciation of 17.5% by 2020.

Chief economist Rob McLaughlin explains that owning a home is one of the most common ways for families to build long-term wealth, as it acts as a forced savings account. Instead of paying your landlord, you can pay yourself in the long run by paying down the mortgage on your house.

In fact, there are four specific ways in which owning a home is a good investment:

1. Mortgage payments can be fixed, while rental rates go up.
2. Equity in your home can be a financial resource later. If you find yourself in a bind, you can borrow against the equity that you’ve built in your home.
3. You can build wealth without paying high capital gains taxes.
4. You will lower your income tax liability through the standard mortgage deductions.

“

You won’t experience the benefits of homeownership while living in your parents’ basement.

”

You can’t accomplish any of those things while living in your parents’ basement.

Still, millennials are afraid that they won’t have enough money for a down payment or that their credit score just isn’t good enough. Do not fear—you can conquer those hurdles quite easily.

We will explain more about that in the future. In the meantime, if you have any questions or are interested in buying a home, give us a call or send us an email. We would be happy to help you!