Can Millennials Buy Homes? Millennial Myths Debunked
Over the years, there has been a lot of talk about millennials, the economy, and if this generation of people will be able to become homeowners. There are many opinions on the matter from people of all backgrounds, but the facts are often skewed in favor of a dramatic effect. There are many myths surrounding millennials and their ability to buy Cape May County homes, but it’s time to debunk them. Here is the truth about some of the most common millennial home-buying myths.
Millennials Can’t Buy Homes Because of Student Loans
It’s no secret that millennials collectively have a lot of debt on their shoulders thanks to the ever-increasing cost of attending college. In fact, the average amount of student loan debt per person in 2019 is more than $31,000. With all this debt, it’s understandable that people, including millennials themselves, think they’ll never be able to own a home.
However, just because someone has debt from one type of loan doesn’t mean that they are barred from taking on more loans. Many people have different types of loans at the same time, the most popular being home loans and auto loans. So long as the person taking out the loans is able to make all their monthly payments, they can have those loans.
Renting is Cheaper than Owning a Home
Many millennials choose to rent an apartment instead of save up for a down payment because it seems a lot cheaper. However, this isn’t necessarily true. While renting an apartment can be more expensive than buying a home, the inverse is actually true in most cases. The only places where buying a home is more expensive than renting are typically states with a lot of rural land and smaller populations, such as Wyoming and Idaho. Otherwise, buying a home is nearly always cheaper or approximately the same cost as renting an apartment. Millennials who are planning to move to a new state or even just move to new housing in their current state should do their research to make sure they’re choosing the option that saves them the most money.
You Need 20% Down to Buy a Home
Countless articles will tell home buyers they need to have 20% of their desired home’s total cost available to use as a down payment. However, it can be extremely difficult for some people to save up a 20% down payment, especially if they have a lot of other expenses. The truth is that home buyers don’t need a 20% down payment to buy a home. They can have a down payment as low as 3% and still be able to purchase a home without any issue.
The only thing buyers need to be aware of when they choose to go with a lower down payment is that they may have to pay private mortgage insurance (PMI). This is a fee that’s added onto the normal monthly mortgage payment and acts as protection in case the home buyer defaults on their loan and is unable to pay it back. Buyers only need to pay for PMI until they have paid 20% of the home’s value back via their mortgage, however.
With so much misinformation regarding millennials out there, it’s no wonder so many of them think they can never be homeowners. Hopefully this explanation sheds some light on the truth of the matter and helps millennials prepare themselves for homeownership.