Here's a familiar story. Young American homebuyers want to purchase a home but challenges such as affording a down payment and getting approved for a mortgage because of low credit scores are holding them back.
But, a new survey by TD Bank revealed that those in this age-group who went ahead and took the plunge are reaping the benefits of homeownership.
The survey conducted by TD Bank targeted 30 year-olds in the U.S. to understand their opinion about renting versus owning a home, with 69 percent of the respondents having an annual household income of less than $75,000 and the balance 31 percent earning more than $75,000 per year.
While 48 percent of the respondents surveyed owned a home, 43 percent rented and the survey revealed that those with incomes over $75,000 were more likely to own their home.
One of the key reasons, the survey revealed that these young Americans took the plunge was to achieve their dream of homeownership, with 46 percent of the homeowners citing this as a reason. These homeowners also said that they recognized the benefits of owning a home compared to renting and cited savings on rental payments and building equity as some of the key reasons to buy.
Twenty-two percent of the homeowners said that they chose to buy over renting because their mortgage payment was the same or cheaper than the rent they would have paid. While 51 percent of males said they bought because they wanted to become a homeowner, the survey found that females tended to be more practical, choosing to buy a home because the costs were similar to those of renting.
The survey said that among those who bought a home before they turned 30, 26 percent said they saved the money, 23 percent had help from their family, 20 percent went with a low down payment, and 15 percent bought it with someone else.
"In an effort to avoid the housing pitfalls they witnessed their parents weather, many are missing out on an opportunity to build equity and invest in property," said Rick Bechtel, US Head of Mortgage at TD Bank. "While the financial aspect remains daunting to many prospective young buyers, today's lenders are working to make homebuying more affordable."
When asked about the attitude of their peers who were still on the fence on purchasing a home, 40 percent of homeowners said they believed that their peers had not made the leap to buy because of the idea that they couldn't afford a home. Of the renters, who were asked the same question 32 percent said they rented because they couldn't afford the down payment to buy a home, while 30 percent said they liked the flexibility of renting.