Millennials are steadily looking to leave the tenant status behind and finally become homeowners. But even though the housing market is great for those looking to buy, surveys indicate that this generation also finds the process overwhelming.
Reports have been published that suggest many millennials are planning to buy their first home in the next year and that owning property is still a strong part of the American dream. Furthermore, many millennials also know that this is a great time to buy a home in Washington, Colorado, Idaho, and Oregon. Why are millennials finding this process so challenging?
Student Loan Debt
One of the biggest reasons why millennial homebuyers are having issues purchasing a home in Boise or Denver is student loan debt. When someone is looking for a home, any potential lender is going to take their existing debt into account. It is no secret that student loans are a major issue right now.
With numerous millennials saddled with student loan debt, this makes it hard to qualify for a mortgage. While other forms of debt are easier to pay back, student loan debt is not. Some millennials have student loan debt that looks like a mortgage. Many graduates are stuck with tens of thousands of dollars or more in student debt, which can take decades to pay off. In the meantime, trying to save up for a down payment while paying off a student loan can be tough.
A Poor Understanding Of Costs
Even though millennials may look at their rent payments as a solid barometer for their mortgage payment, there are other costs that millennials need to consider. Buying a home in Portland, or Federal Way comes with plenty of other costs aside from mortgage payments. For instance, there are closing costs that need to be taken into consideration. Typically, closing costs include things like real estate taxes, real estate agent commissions, adjustments, appraisals, home inspections, HOA fees, homeowners’ insurance, and potential repairs. Therefore, they might need to reset their expectations.
The Rise in Home Prices
Home prices have soared over recent years. What the parents of millennials likely paid for their home two or three decades ago is a far cry from what homes are worth today. Moreover, the rise in home prices has increased faster than the rise in wages, making it more difficult to save up a down payment and get into the market.
This is particularly true in more expensive markets, such as Seattle or Bellevue where home prices are well over the average in Washington and the nation as a whole. That said, there are plenty of markets where home prices are rather affordable, such as Tacoma, while still being close to cities like Seattle.
Establishing a Career
Of course, a solid income is required to be able to afford a home purchase and get approved for a mortgage or financing. But many millennials find it takes a while to climb the employment ladder or make enough income to afford a home. Yet, without a sound source of income, getting approved for a home loan can be a challenge.
Comparison Is A Dangerous Temptation
Finally, too many millennials are tempted to go with what they know. The reality is that many millennials end up moving back into their parents’ house after they finish school. Often, millennials think this is a great way to save money, especially when the job market is tough. Though millennials may be able to save a few bucks this way, there is also a strong likelihood that they will end up looking for a similar house to their parents.
As a result, many millennials have set the bar rather high for their first home. Ultimately, a property like their parents’ simply is not within the budget, and an unwillingness to accept this only makes it harder to find a home. Yet, there are affordable homes out there for millennials–they simply need assistance to find them.
Having said all that, it is not impossible for millennials to finally become homeowners. In fact, the entire process should be hassle-free, especially when you team up with a professional real estate agent and mortgage company in WA, OR, ID, and CO. gathering the right partners in your corner can make buying a home as a millennial a streamlined process.
Ready to Apply for a Mortgage?
If you are ready to apply for a mortgage, Sammamish Mortgage is here to help. We are a mortgage company serving the Pacific Northwest region including Washington, Idaho, Colorado, and Oregon. We have been providing mortgage programs with flexible qualification criteria to borrowers since 1992. Please contact us if you have any questions or are ready to apply for a home loan.