According to author David Bach, “If millennials don’t buy a home, their chances of actually having any wealth in this country are little to none. The average homeowner is 38 times wealthier than a renter.” While millennials make up the largest share of homebuyers in the US they are becoming homeowners at a slower pace than previous generations. Affordability is the primary obstacle and college debt is at the center of the problem. Two major and unrelated changes in underwriting will help thousands get a mortgage. But will it add more risk to the market?
- Timeliness: Non-urgent, but good discussion for sales meeting
- Expiration: 12/31/17, unless updated
- 80% of Millennials report that they would like to buy a home, and a majority say it’s part of their five-year plan.
- However, 68% have saved less than $1000 and almost half (44%) have nothing at all.
- Fannie Mae and Freddie Mac increased Debt To Income (DTI) ratios from 45% to 50% on July 29, 2017.
- The DTI increase is a response to Millennials carrying more student loan debt than any generation of potential homeowners.
- Some builders are now offering incentives to pay down student debt to attract new homebuyers.
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