The misconception about down payments continue to hinder millennials from the possibility of owning a home.
An outlook study conducted by United Shore Financial Services along with Michigan State University found out that a whopping 96% of its respondents became more interested in purchasing a home after finding out that down payment could actually be the same as two months’ worth of rent.
Industry professionals at a recent Mortgage Bankers Association (MBA) conference cited the belief that a 20% down payment was required to get a mortgage as “the greatest cause of confusion among first-time homebuyers.” This was evident in United Shore’s survey, as 67% of millennials thought the 20% down was indeed necessary, while only 7% were aware that a down payment can be 5% or less.
“Millennials don’t need to put down 20% to buy a house,” said Brad Pettiford, communication strategist at United Wholesale Mortgage (UWM). “They don’t need to go to a bank to get a mortgage. There are several misconceptions that young people have about the homebuying process, and I think a big part of that is because of what we grew up hearing from our parents.”
Aside from the down payment misconception, other factors cited in the survey that discourage millennials from home owning include worrying about getting approved for a mortgage (67%); being intimidated with the responsibility of owning a home (63%); and fear of not paying mortgage on time (53%).
“A sizable portion of respondents thought that it costs more to use a mortgage broker instead of going directly to a bank or retail lender, which isn’t accurate,” said UWM President and CEO Mat Ishibia. “It seems counterintuitive to think it’s cheaper to add a ‘middleman’ to the process, but mortgage brokers are actually able to offer more competitive wholesale pricing to borrowers and aren’t held captive to one lender’s pricing or products. They truly can shop around to find the best deal for each borrower’s situation.”
Team Leader, The Tonnesen Team
Berkshire Hathaway HomeServices, Nevada
3185 St Rose Pkwy #100 Henderson, NV 89052
With over 30 years of experience helping families call Las Vegas "home!"
Related Blog Posts
I had a VA client who was told by their lender that they did not have to pay closing costs. One of the things I do for all my clients is to explain the buying process and with a VA loan, I explain they may qualify for no money down but there are still closing costs. I asked my client to check with their lender what the...
Sales of previously owned U.S. homes climbed for the fifth time in six months to the highest level since 2007, indicating housing-market momentum will extend into 2017, National Association of Realtors data showed Wednesday. by Patricia Laya at Bloomberg Key PointsContract closings rose 3.3 percent to a 5....
There is no denying that when you're house hunting, the allure of new construction in Las Vegas is undeniable. The Las Vegas Valley currently boasts dozens of builders with over 1079 floor plans to choose from. While the average price range runs in the mid $300Ks there are Las Vegas New Construction houses available...
Young Americans are delaying homeownership because they're burdened with student loan debt, waiting longer to get married and have kids, and spending more on renting. Some are still living with their parents — especially in certain parts of the country. Waiting longer to buy a home means there's...
5 Listing Price Considerations to Keep in Mind If you’re planning on selling your home or you’re thinking about buying a new home, the listing price is one of the most important factors for success in either case. For the buyer, the listing price matters because a buyer wants to get the best home a...