(WJBK) - Currently, only 36 percent of Americans under the age of 35 own a home - the lowest level since 1982. Here are some of the root causes:
- Overwhelming loan debt and the costs associated with homeownership prevent younger consumers from affording a home.
- Lending standards are much tighter after the recession.
- Coming up with a 20 percent down payment to avoid private mortgage insurance requirements is a challenge for younger consumers who are still establishing their collective financial footing.
- Lack of credit prior to applying for a loan.
- The number of homes available for sale has decreased in many markets - first-time homebuyers can't compete with cash buyers.
- The trend of millennials delaying marriage is causing a delay in settling down - and purchasing homes - in this demographic.
With these external factors making it increasingly difficult for millennials to become homeowners, what should they do to position themselves - and their families - for short- and long-term financial success?
Mike Kruczek offers the following tips for millennials to better prepare for their first home purchase:
Budget for long-term financial sustainability
Even before buying a home, put about 15% of your annual income into a savings account to accumulate your down payment funds over time. It would take only three years to exceed $10,000 in savings if you put away $300 per month.
Pay attention to fees and add-ons
Many times, first-time homebuyers don't consider the cost of origination, processing and underwriting fees and other miscellaneous add-ons when creating their budgets. By failing to recognize the extras, you run the risk of agreeing to a monthly payment that exceeds your budget and limits your financial mobility in the short and long term.
Be sure to speak with an objective lending expert who's not affiliated with a particular product to make sure you're getting the perfect loan for your budget.
Refinancing at any time
Understand the conditions of various mortgage options, including the option to refinance or pay ahead. While you may opt for a 30-year payment plan - and lower monthly payments - you will pay a higher interest rate. As your income increases and you become more financially stable, pay ahead on the principle of your mortgage to cut the loan duration.
Speak with an unbiased expert
Speak with a true financial partner whose only interest is helping you get the perfect loan for your budget. By discovering your options and knowing what you can afford up front with a loan preapproval, you'll set yourself - and your family - up for short- and long-term financial success.