When it comes to homeownership, many viable candidates take themselves out of the running before they even verify if they are actually eligible for receiving a mortgage. In many instances, these potential contenders can qualify to buy a home! So what’s holding them back?
One common contributor to the lack of homeownership is inaccurate information. Individuals believe they can’t afford a mortgage or that they aren’t financially stable enough to get approved. Also, many may still believe that renting is the more affordable option like in years before; however, that may not be the case in many situations. Higher demand for apartments have caused soaring rent rates, driving the monthly payments to well above those of mortgage payments so it may actually be cheaper to own a home than to rent one. As reported by National Mortgage Professional, according to a survey done by Zillow, 14% of renters can afford to buy homes.
The millennial generation, which is now the largest consumer generation, grew up during the bursting of the housing bubble and the downturn of the economy. Many of them saw family members suffer major losses in their home investments. It isn’t shocking that this would have a negative impact on the outlook of home ownership.
More than 40% of Americans carry a student loan balance, with the most recent graduating class averaging a little more than $35,000. With that type of financial burden looming over their heads, it’s understandable why individuals are putting off homeownership. In fact, paying off debt before applying for a mortgage loan could save money in the long run by decreasing your debt-to-income ratio affording you better rates. However, with student loan repayment plans having 30-year loan terms, waiting until all of your loans are payed before buying a home may not be the best option for you and your family.
Lack of desire
For individuals who elect to rent, finances may not be a major concern or reason behind why they choose not to own. With renting comes flexibility, and for individuals who love to travel and don’t want to settle down in one place for too long, renting is the best option. They are able to enjoy the community an apartment may provide through amenities or living in a major city. Not to mention, with homeownership comes a whole other set of responsibilities such as maintenance and repairs, yard upkeep, and fronting all of the costs.
These concerns may be the reasons individuals are holding back for now, but as history shows, there has always been a rising and falling in the housing market and although homeownership is currently at an all-time low, the probability of it staying this way is very unlikely.