Millennials are starting to wonder if they’ll ever be able to afford a home. With record high sale prices, stricter mortgage regulations, and a large boomer population that’s downsizing, millennials have a lot to worry about. However, they shouldn’t stress too much yet. Here, we debunk these top 5 concerns millennials have about buying a home.
I Don’t Make Enough To Purchase A Home
Many millennials fear that their entry-level and mid-level incomes will not be enough to get a mortgage approval, even with a 5% down payment. However, this is not entirely true. The 2018 Mortgage Consumer Survey found that 49% of first-time home buyers who purchased between March 2017 and March 2018 were, in fact, millennials, and only 26% of those people have a household income of over $60,000. This means that over 70% of millennials were still able to find ways to save and purchase a home, even with a mid-level income.
I Won’t Be Able To Find The Right Home
According to the survey, 47% of first-time homebuyers were also concerned they wouldn’t be able to find the right home. However, getting priced out of one area doesn’t mean there aren’t other communities that would fit various lifestyles and budgets. Getting in touch with a real estate agent who has market expertise in a variety of neighbourhoods can help you find the right property at a rate and area you are comfortable with.
I’ll Never Be Able To Save For The Down Payment
The cost of housing has quickly increased over the past ten years, and many millennials worry that they’ll never be able to save up for a down payment for a home they want. However, if you want to buy a home, there are several federal and provincial programs that can help you get into a home sooner. For instance, the Home Buyers’ Plan (HBP) will allow you to take out $25,000 of your RRSP savings and use it tax-free towards your down payment. The only catch is that you’ll need to pay it back over 15 years in annual installments.
I Won’t Pass The Stress Test
Those who had their heart set on a single-family home in a nice neighbourhood are now struggling to afford those rates based on the new requirements. But that doesn’t mean all is lost. In fact, 33% of first-time homebuyers who were concerned about not qualifying were still able to purchase because there are plenty more options out there than just a single-family home. Duplexes and condos not only cost less but also give millennials a chance to feel out homeownership without diving head first into maintenance requirements and higher fees, while still building equity to help them fund their forever home.
I’ll Become House Poor
Over 50% of first-time homebuyers who were able to save for a down payment and buy a home were still concerned about unforeseen costs they’d have to deal with. With heavy debt loads and inexperience, they were worried that unexpected costs they did not save for would heavily impact their mortgage payments. Fortunately, there are many ways to pay down your debt faster to create a slush fund for maintenance and repair fees. This includes paying down high-interest debt first, consolidating high-interest debt into one payment, and getting a second job. Some mortgage lenders will also allow you to consolidate your existing debt into your mortgage.
If you’re ready to buy a home but have fears that are holding you back, reach out to our financial team at the Mortgage Advisors. We know all the ins and outs of the system and can give you all the advice and help you need to purchase a home.