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Millennials have been toying with the idea of buying a home for the past year. Many say they want to make the jump, but there are extenuating circumstances still holding them back. Things like:
- Student loan debt
- Limited credit profile
- Fears leftover from the credit crash of 2008
- Lack of knowledge about the financing process, and
- A shortage of affordable housing
Coupled with these challenges, it seems that after all that the CFPB and the industry have to done to better educate consumers on the home buying and financing process, many Millennials still haven’t gotten the message. This generation is still confused about home buying and financing. So if they’re confused, what about the rest of potential home buyers?
One of the biggest misconceptions remains the amount needed for a down payment. A recent study, conducted by National Association of Realtors, revealed that more than 85% of non-homeowners believe they need at least 10% down to a buy a home.
This includes most of the Millennial generation, a generation of about 75.4 million, made up those now between the ages of 20 and 36. That’s a whole lotta potential home buyer!
So what’s an industry to do? I say we need to better educate all consumers, including Millennials, on the facts about mortgage financing.
Don’t leave it to CFPB, Realtors or anyone else. Although Century 21 Real Estate now offers a home buying education program, they advise that most people strive for at least 10% down. That could be very misleading.
Let’s not keep secret all the great lending programs created to assist first-time home buyers, as well as all homebuyers who may have limited down payment capability. Let’s get the word out that these programs do exist and how they can help anyone afford a home.
Plenty of great lending programs exist today to help consumers buy a home with a lot less down than 20%. Problem is that consumers don’t know about them. We promote these programs among ourselves but need to do more to educate consumers.
Originators must spread the word to Realtors and Builders about these programs, that explain how they can be used to help them sell more homes and qualify more buyers.
Some direct to the consumer advertising is also needed as many may not look for a home believing they won’t qualify for financing because they have a limited amount to put down.
Perceptions become reality. If consumers continue to believe they need 10% or 20% down they won’t shop for a home until they have that amount. That can unnecessarily delay their entry into the market. That’s bad for them, for Realtors and lenders. We can’t let that happen.
