Debunking Home-Buying Myths for Millennials and Gen Z

Many young people today, like Lindsay Hardy, a marketing director in Philadelphia, feel that homeownership is beyond their grasp due to economic barriers and market complexities. However, a deeper look into these concerns reveals that much of their hesitation is based on prevalent myths.

Myth 1: Prohibitive Interest Rates

Contrary to popular belief among young generations, today's interest rates are not the highest on record. Alex Shekhtman, CEO of LBC Mortgage, points out that while millennials and Gen Z grew up during economic turmoil, such as the 2008 financial crisis, they witnessed historically low rates during the COVID-19 pandemic. It's crucial to understand that while current rates may seem high compared to the all-time lows of recent years, they are still relatively manageable compared to the sky-high rates of the 1980s, which once peaked at 18.63%.

Myth 2: The 20% Down Payment Rule

Another significant barrier is the assumption that a home purchase requires a 20% down payment. However, various programs such as FHA loans, VA loans, and USDA loans, along with Conventional 97, HomeReady, HomePossible, and HomeOne programs, offer opportunities to put down as little as 3%. This makes homeownership more accessible than many young buyers realize.

Myth 3: Impeccable Credit Is Necessary

A common misconception is that stellar credit is a prerequisite for buying a home. In reality, many loan programs are available even if your credit score is not in the 'excellent' range. FHA loans, for example, are obtainable with a credit score as low as 580 (or even 500 with a higher down payment). Potential buyers need to look beyond the myths and understand that there are numerous options available to accommodate different financial situations.

Bottomline

If you're a Millennial or Gen Z individual thinking about homeownership but feel deterred by myths and misconceptions, it's time to look at the facts and explore your options. Homeownership could be more attainable than you think. For those considering a move to Orange County, let's connect and find the right home for you!

Reference: Gerstein, J. (2024, August 12). 3 Myths Stopping Millennials and Gen Z From Buying a Home.Realtor.com