Home loan demographics are changing as demographics as a whole are changing. A new generation is reaching adulthood, resulting in a spike of people looking to buy a home.
With this spike comes its own challenges. That’s particularly true for this rising generation.
If you’re a Millennial, you may think you can never afford a home. You’re a member of one of the most indebted generations in history and, on top of that, just starting out as a financially independent professional. But there are ways to make it affordable.
Here’s our look at how demographic changes are affecting the market and what Millennials can do about it.
The New Spike
As the times change, so do demographics. In the case of Millennials, that change is becoming abundantly clear.
Millennials are defined as the generation born between 1984 and 1997. Currently, there are more of them than there are Baby Boomers, the previous largest generation.
This demographic spike means there are now 75.4 million potential homebuyers on the market. For older Millennials in particular, buying a home may be more of a possibility.
Consider the fact that a person born in 1984 is now 33 years old. This is about the perfect age to take out a home loan.
Debt and Home Loan Demographics
Debt has a significant impact on the way Millennials engage with the real estate market.
There are currently 1.3 trillion dollars worth of student loan debt in the United States. This has been labeled a crisis, because the debt payments for these student loans eat away at a Millennial’s ability to save for a down payment on a home.
It also has a strong impact on the likelihood of Millennials buying property. A mortgage is a form of debt. For a generation already crushed by student loan debt, it seems foolish to sign up for more and make your disposable income even smaller.
It also makes sense that Millennials want to improve their credit score before signing up for a home loan. This would mean paying down other debt, such as credit cards, and making all payments on time for a consistent period. A home loan can be more affordable with a lower interest rate, which in some cases translates to a lower payment.
There can be serious consequences for not having your finances in order before signing up for a mortgage. These range from needing a loan modification to outright foreclosure.
Either way, Millennials considering buying their first home should absolutely be sure that they can afford it before doing so.
This means having a good amount of money in your savings. It also means having a long-term plan to pay off student loan debt along with a plan to pay off your current home loan.
There are some incredibly expensive homes in the United States. But you don’t need to live in a mansion to know that a home is one of the most expensive things you’ll ever buy.
If you think you’re ready to take on the s
erious milestone and responsibility of a home loan, we’re here to help.
We offer mortgages to people who want to be able to afford their next home. It isn’t easy because a mortgage is an incredibly complicated financial construct.
But it’s also worth it. You’ll save a lot of money in the long run by buying instead of renting, and you’ll also love having a home to spend the next stages of your life in.
Contact us if you want to take control of your future with a mortgage.