Are millennials falling behind on homeownership? According to a new report from LendEDU, millennials that are not yet homeowners to see may lack some knowledge about key details of buying a home and obtaining a mortgage.
According to LendEDU’s survey most millennials, between the ages of 23 and 38, are homeowners, at 58%, and 89% of the remaining respondents said they wish to become homeowners at some point in their life. Additionally, the majority of respondents (65%) think they can become homeowners within the next five years.
The biggest obstacles for these millennials who have not yet become homeowners are low incomes and a lack of savings.
“Monthly mortgage payments can get quite steep and require a serious financial commitment that usually calls for having at least three months worth of payments stowed away in savings, so this result makes sense,” said LendEDU.
Other factors holding millennials back included “poor credit” (17%), “overwhelming student loan debt” (10%), “other debt” (6%), and “overwhelming credit card debt” (5%).
LendEDU also examined how the 2008 financial crisis impacted the homebuying decisions of millennials. According to the survey, 13% of millennials that have no desire to ever become homeowners cited the 2008-09 financial crisis as the reason for that lack of desire. LendEDU states that though this is not a large portion, it is large enough to take notice.
Yet another factor holding back young potential homebuyers is the complicated mortgage buying process. LendEDU survey states that 55% of millennial respondents stated their lack of knowledge on homeownership and mortgages has prevented them from being a homeowner. One piece of information millennials lack is the down payment amount. On average, millennials are overestimating the amount needed for a down payment, stating that 37% of the home’s total purchase price was necessary. In reality, a 20% down payment is ideal and seen as the status quo mortgage down payment percentage, and a home-buyer can actually make a down payment as low as 3%.