Generation Y Missing out on Buying a Home

The volatility of the housing market over the last few years has made a huge impact on many buyers, but, none more so than Generation Y. Many of these buyers (most of whom were born between the mid-1970’s to the early 2000′s making them anywhere between 18 and 34 years old) want to buy a home, but, have taken a huge monetary beating from the recent recession, financial and housing crisis.

Some recent research from the John Burns Real Estate Consulting firm has shown that the number of adults who are living with their parents dramatically increased over the last eight years. While many of these men and women believe that the American Dream includes owning a home, many believe that they won’t be able to purchase one until much later in life. Many things have contributed to this phenomenon, the three major things include:

Debt overhang

Many of the people graduating from college are coming out of college with huge student loans on their record. Some people owe upwards of $100,000 to various lending institutions. This high cost of higher education has made it more difficult for those who do not take high paying jobs (i.e. teachers, nurses and others), but still owe a high amount of debt. These obligations make it more difficult for Millennial to save up the necessary amount of money to make a down payment.

Lack of good employment options

Persistently high unemployment has been the tragedy of the recession that began in late 2007. Historically, this is the slowest recovery of the economy since World War II. Many problems with Millennial home ownership stem from the fact that the unemployment rate among 18-34 year olds is a staggering 22%. Even a college or graduate degree doesn’t guarantee you a job if you are freshly graduated. This forces these college graduates to take a lower paying job while searching for a better one further delaying when they are able to afford purchasing a home.

High pressure on wages because of financial crisis

Unfortunately, even if they are able to find a decent job, the high unemployment has created a high pressure on worker’s wages – especially over the last five years. Downward pressure on wages make it difficult for Millennial to save up the necessary amount of money they need for a good down payment along with other debt obligations like credit cards or student loans they may have.

Credit Crunch

Credit is also not as easy to get as it used to. Before, many people were not required to demonstrate proof of income or security when buying a house. After the housing crisis, that all changed. It takes a lot more documentation and proof to get a lender to consider loaning you the money to own your own home. Credit companies want to see a good credit history along with a good credit score.

Millennial living at home

After college, many people move back in with their parents in order to save money and make it easier to find their own place. However, because of the combined factors, many of the Millennial generation find themselves stuck at their parent’s house and aren’t able to save enough to get out on their own.

Generation Y homeowners are in the sweet spot of home buying, but they are having a tougher time than any other generation that came before it to buy. This has also contributed to the very slow housing recovery we’ve seen over the last few years. A new generation who are all delaying their first home purchases have prevented the economy from helping the housing market recover as quickly as it has in the past. Until high unemployment and student loans are dealt with, Generation Y may have to deal with a delayed onset of their adult lives and responsibilities.

Down Payment Assistance Programs

Although the mortgage industry has changed substantially during the last few years in regard to down payment assistance, there are still a multitude of programs available for many home owners.  The following are just a few programs available. 

Georgia Dream – Offers $5000-$7500 toward down payment and/or closing costs.  This is a loan that must be paid back when the home is sold or refinanced.  You must be a first-time homebuyer and complete an online homebuyer course.  The interest rate is determined by Georgia Dream.   There are income limits of $40,150 to $57,350 depending on how many persons are in the home.

Georgia Dream Plus – Offers $5000 toward down payment and/or closing costs.  This is a loan that must be paid back when the home is sold or refinanced.  You do NOT have to be a first-time homebuyer, but you must complete an online homebuyer course.  The buyer must have a 660 credit score and must contribute $1000 toward the transaction.  There are income limits of $71,000 to $82,000 depending on how many persons are in the home.

Georgia Dream PEN – Offers $7500 to eligible homebuyers who are employed by entities that provide public protection (including the military), health care or education.

DeKalb County – Offers $5000 toward down payment and/or closing costs.  Buyer’s who show they have raised their credit score to 620+ can receive $8000.  Condos or 203k’s are not allowed. Buyer must take an in-class homebuyer course and a home inspection must be submitted.  Buyers must be a first-time buyer and contribute 1% towards the transaction with a maximum sales price of $160,000.

Gwinnett County HomeStretch – Offers $7500 toward down payment and/or closing costs.  Must be a first-time buyer and complete a homebuyer course.  Qualifying homes must be built after 1977 with a maximum sales price of $200,000.

For a more complete list of down payment assistance programs and guidance on who to contact for qualification procedures, please contact Mark Lackey (404-886-8789) with Atlanta Housing Source.

What is the Maximum Mortgage I Can Qualify For?

A mortgage is a loan obtained to purchase real estate.  The “mortgage” itself is a lien (a legal claim) on the home or property that secures the promise to pay the debt.  All mortgages have two features in common:  principal and interest.  These two terms are defined in the glossary or the end of the brochure.

You will need to work with a lender to become pre-qualified and have them assist you in deciding on the type of loan that is best for you.  The pre-qualification process involves simple calculations that you can perform prior to ever applying for a mortgage to figure out what price range you should be looking in as well as the monthly mortgage payment (principal plus interest).

We can provide you with a simple HUD Pre-Qualification Mortgage Worksheet and sample factor table to find out the loan amount you can qualify for based on your gross (before taxes) monthly income.   Once you have the mortgage amount, you can simply add your downpayment and then you will know what Sales Price you need to be searching.

The factors used in calculating the Maximum Mortgage Amount and payment are your gross income, housing costs and other long-term debts (like car or student loan payments), and monthly debt payments with 10 months or more payments remaining.  The worksheet will guide you through the calculation process taking into account escrows and mortgage rate factors.

If you would like to receive this simple Pre-Qualification Mortgage Worksheet, just email Mark Lackey at Atlanta Housing Source (info@AtlantaHousingSource.com) and request this Worksheet.  We will be happy to assist you with the calculations if necessary and can refer you to a loan officer if you are not already working with one.  Once you know your qualification limitations, we can assist you in finding the home of your dreams located in Gwinnett, Cobb, Forsyth, and North Fulton.  Call Mark today at 404-886-8789.

How to Buy The Most Home For Your Money

Now is a great time to consider buying your first home, moving up to a bigger home, and/or purchasing your dream home because of the current market.  You must make preparations, though, in order to make these goals a reality.

Start Saving: Once you have committed to the idea of buying a home, start putting away money and cutting back where you can.  This may mean a few less dinners out, but getting started on saving towards a down payment will help you in the long run.  Make owning your own home a priority.  The majority of lenders want to see you put up at least a portion of the money used in buying a property.

Keep your credit clean: Your credit rating will be playing a big part in how much a lender will let you borrow and IF they will let you borrow.  Make it a point to pay your bills on time.  Now may also be a good time to pay down some debt if possible, but do not close the accounts.  Closing an account can actually hurt your credit score according to some experts.

Look for starter homes and bargains: If a first-time home buyer, this  home will probably not be your dream home, but it is an important step on getting you there.  Your first home will start you on the equity-building path that leads to your future purchases.  Condos, townhouses, and duplexes are often much less expensive than detached housing and buying one in a good area can serve as a good stepping stone.  Likewise a bargain home in a good area that needs fixing up can be a good trade up in a few years if you are willing to give the fixer upper home the attention it needs.

Atlanta Housing Source would welcome the opportunity to work with you in finding the perfect home to fit your current needs in Gwinnett, Cobb, Forsyth, and North Fulton.  Contact  Mark Lackey at 404-886-8789.