Do a basic Google search on millennials and homebuying and you are bound to be confused by the mishmash of conflicting information out there. Either millennials are “dragging down homeownership,” according to CNBC, or they’re the reason homebuying is surging, said Bloomberg.
If you’re a millennial (generally considered to be anyone born between 1982 and 2000), what does all this mean for you? If you like to collect data and read endless reports on homebuyer trends, you’ll have a lot to keep you busy. But if you’re a homebuyer, or would like to be, the real point may be hidden.
The “I can’t afford it” myth
A recent story on Slate got to the heart of the matter about why more millennials aren’t buying homes: they don’t think they can afford to. The “Federal Reserve survey about America’s overall economic well-being asked renters why they didn’t buy a home. Among 18-to-29-year-olds, the most popular answer by far (49 percent) was that they couldn’t afford a down payment. Meanwhile, 24 percent said they couldn’t qualify for a mortgage.”
What many of these individuals are not taking into account is how little money is really needed to buy a home and how easy it can be to qualify. Depending on credit scores, employment history, and other considerations, homebuyers may be able to qualify for low down payments that require little money upfront.
Down payments for homes can be as low as 3.5 percent using a Federal Housing Administration (FHA) loan. This is a loan that is insured by the federal government. For a home priced at $175,000, that means coming up with just $5,000. And, in many cases, down payments can be gifted from someone else. Historically low interest rates also help to make monthly payments more affordable.
A late payment here, an over-the-limit warning there, and pretty soon your credit score has taken a hit. If this sounds familiar, you might think you won’t qualify for a mortgage. But a quick check of your credit and a chat with a lender could surprise you.
An FHA loan typically requires a minimum score of 620 for a mortgage, but other factors will weigh in as well. If your score is 620 or lower, there are items you can attempt to clear up in order to raise it.
First, look at your credit report, which you can order for free once a year here. Tag anything that is inaccurate and start calling to see if you can get the incorrect items removed. Then, concentrate on negative items. “Anything in collection or charge off status will really weigh down your score..and that should all be cleared away,” said CBS. Sometimes paying off old balances is all you need to get the negative items removed and raise your score. For more information on raising your credit score, see US News or Huffington Post.
Homebuyers sometimes fail to consider new homes as an option because they think the price will be out of their range. This is especially true of millennials, who automatically assume they will not be able to afford a brand-new home. But the truth is that new homes offer a uniquely affordable option that can be priced similarly to older homes. Certain new homes, like those from Lennar at Mission del Lago on the SouthSide, offer unique programs like “Everything’s Included,” with “all the add-ons and extras a homebuyer could want, simply included and at the best possible value.” D.R. Horton’s homes at Mission del Lago gives homebuyers an array of affordable floorplans that can be further customized with additional bedrooms, studies, lofts, and covered patios to suit individual family needs.
Another benefit of new homes is the new home warranty that protects the home and features and can save owners money over the years. A used home may have older or poorly maintained features that may soon need replacing, while a new home and the features within should offer years of comfort and enjoyment before needing replacement. Energy-efficient features in new homes conserve energy, which means even more savings.
The bottom line
If you are a millennial who has been sitting on the sidelines because you don’t think homeownership is affordable for you, a phone call or visit to Mission del Lago could change your mind—and your life. Mission del Lago is the ultimate SouthSide new-home destination with a warm, friendly feel, a convenient location close to work and play, and homes priced from the $150s. For more information about living in the fastest-growing neighborhood in South San Antonio, visit Mission del Lago or click below to learn more about the move-in ready homes available now at Mission del Lago.