Owning a home is part of the big American dream. It’s why we care about going to college and getting the best education money can buy. When it’s time to settle down and start a family, part of the process involves securing a mortgage.
Right now, millennials fall within this age group. They’re graduating college, but find that life outside the campus isn’t as easy as they first thought, forcing them to live at home.
The first issue is the current housing economy. Millennials are starting their families, yet they find that housing isn’t so easy to find anymore. When they do find something, the prices are through the roof. That’s because the high demand coupled with low inventory sends cost nearly to unattainable levels on its own.
The cost of rent is much higher. 23% of millennials say they felt forced to buy a home because rent was way too high. Rent has gone up in 85 of the top 100 cities, according to a survey from the Department of Housing and Urban Development.
This isn’t the only thing stopping millennials from buying a home. The other issue is their debt.
Currently, 62% of millennials have student loan debt, which exacerbates the cost of home ownership. 45 million Americans owe $1.5 trillion in student debt, as it was recently reported. It’s a new record that doesn’t seem to be going away anytime soon.
Almost 1/5 of those with student debt owe $100,000 or more. That’s a lot of money and it works against them when it’s time to buy a home.
A large amount of student will not only take a large portion of your income (if you’re paying back regularly), but also put a huge dent in your credit. If you’re credit isn’t in tip-top shape and you already have a large amount of debt, banks will be less likely to give you a loan.
Even if they do feel confident enough to do so, you can bet the interest rate will be enormous.
That’s why 80% of millennials blame their lack of home ownership on their student debt. Regardless of their need to escape high rent costs and/or they’ve started a family and need a bigger place, their student loans made their dream impossible.
According to the National Association of Realtors, nearly 1/5 of those who can’t get mortgage approval are denied because of student loans. That’s because their debt-to-income ratio is way too high. Banks look it as unsecured debt, which is applied negatively towards the borrower.
If a large chunk of your income is going towards student loans, that means you probably don’t have much of an opportunity save money. If you can’t save, then you can’t afford a down payment.
85% of those with student loans say they delayed buying a home because they didn’t have the money for a down payment. Most former students pay between $350-$500 each month for their loans. That makes it extremely challenging to be able to throw down $40,000 for a down payment.
For this very reason, a lot of millennials turn toward their parents as a co-signer or for the loan.
The best thing for anyone to do after graduating college is to focus on their career and paying off debts. If your debt is getting the best of you and preventing you from having milestone moments, then you should get help in taking care of your loans.
The federal government has created several programs designed to help people pay off their debts faster.
For more information about these programs and to see if you qualify, call us today at: (855) 221-9282. Getting your student debt under control should always been your first goal, or else it will keep you from living the life you deserve.