To most Millennials, buying a home seems unattainable for a variety of reasons. The truth is that most of these reasons, are mythical and outdated concepts that should be put to rest. While it’s normal to have concerns about purchasing a home, it’s essential to have all of the facts, in order to ensure that the best decision being made.
Myth: I need to have 20% to put down before I can purchase.
Fact: One of the biggest perceived barriers to entry to home ownership is the $$$$! The concept that home buyers MUST have a 20% down payment is downright outdated and a myth. There is absolutely no requirement for a home buyer to have a full 20% down payment sitting in their bank account.
The real question should be,“Is it better to have the full 20%?” Financially-speaking, yes. Putting 20% down on your purchase will save you some money in the long run and serves as a smarter financial move. Added bonus: you wont have to pay monthly private mortgage insurance, along with your mortgage, if you put down that 20%.
While having the full 20% down payment is not a bad idea, it is unnecessary. Most importantly, it should not hold millennials back from buying a home.
Q: How much is private monthly mortgage insurance?
A: It depends, but it’s typically between $100-$200 per month. Not bad, right?
Myth: I’m thinking about moving to Europe for a year. If I have the money, should make a real estate purchase?
Fact: Millennials, in particular recent college graduates, are in a period of their lives when a lot of personal and professional development happens. College grads are likely starting their first job, learning the in’s and out’s of the professional world, while trying to maintain somewhat of a social life. At the same time, they are trying to figure out what the heck they are going to do with the rest of their lives.
“Adulting” can be a lot to handle.
Because “life happens,” sudden and unexpected life changes like moving cities in order to land that perfect job or take on a promotion with your company, or you are faced with a large tax liability without enough write-offs.
If you see yourself moving in the next 1–3 years, it probably isn’t the right time for you to buy a house. Financially, it does not make the most sense to make a big, long-term purchase, if you are going to have to turn around and sell it in just a couple years. The goal is to make money on your house, not break-even or even lose $$$.
Myth: I want to be married or engaged before I buy my first home.
Fact: NO, NO, and NO!
Throughout our short lives, we may have been instilled a life plan that is outdated or unrealistic:
- Get married
- Buy your first home
- Have children
Sound familiar? There is no legitimate reason that anyone has to be married, in order to buy your first home or condo. NONE! The only plus side to this is that with a spouse, you have the double income to help qualify with a mortgage. But, your relationship status shouldn’t be a determining factor on whether you, as a Millennial, should buy your first home.
It’s a PERFECT time to buy, if you’re a Millennial! What’s holding you back?