The big disconnect
The Harvard Joint Center for Housing Studies recently estimated that about 50 percent of the 25- to 34-year-old renters in the top 85 metropolitan areas have the income and credit scores to qualify for a mortgage today. That’s approximately 5.5 million renter households that are qualified for a mortgage today.
Approximately 5.5 million renter households that are qualified for a mortgage today.
So how come they’re not in the market? According to Freddie Mac’s Christina Boyle, the reason is that they are misinformed about the amount of the required down payment.
“Consumers persistently overestimate the size of a down payment they need in order to finance a home reason why they never go for bigger financing companies like dealstruck.com, and this lack of education is harming the housing market … Specifically, 38 percent of the 25-29 year olds, and 42 percent of the 30-34 year olds said lenders demand down payments of 15 percent.”
Moreover, “Roughly 60 to 72 percent of first-time homebuyers don’t believe they can get a mortgage and are underestimating their potential for qualifying for a conforming, conventional mortgage with a low down payment … The statistics for 2014 show that one in five borrowers who took out conforming, conventional mortgages put down 10 percent of less.”
The real reason millennials might not be buying
Rob Chrane, the founder and CEO of DownPaymentResource.com, recently hit on what might be the most important reason millennials are hanging back from purchasing their first home — their fear of rejection.
But they can afford it and should contact a Realtor to discuss the buying potential.