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down-payment

Over 64% of Millennials Put Less Than 20% Down When Buying a Home. Here’s Why

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Over 64% of Millennials Put Less Than 20% Down When Buying a Home. Here’s Why

millennial-graphFor decades there has been an unwritten rule that buyers must put the maximum amount of money possible for a down payment.  This figure was eventually shaped up to be the 80/20 rule with 20% needed for a down payment.  For many 20% has been an intimidating figure that has discouraged them from purchasing a home.  However, over the years lenders have created new programs that not only reduce down payments they all but eliminate the need.

Years back, folks settled in jobs and cities and rarely uprooted so putting the maximum down payment made sense.  However, today’s generation change jobs a lot more frequently.  They uproot and relocate as well as move on to new homes, all within 3-5 years of buying.  With this new trend of home ownership, putting 20% down or tying up most of your liquid assets into a home doesn’t make as much sense.

Observing this new trend Digital Risk, an quality control entity recently conducted a housing survey on Millennials in the housing market, surveying 1,344 millennials, who are between the ages of 18 and 34, distributed nationally by their age, gender and census geography.  What the study found was that almost two thirds of millennials that have recently purchased a  home did so with less than 20% down.  An even bigger shock was that 36% put less than 5% down.

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Digital Risk also surveyed millennials that are currently renting and found that 36% are still under the beliefmilennial3 that 20% is a requirement to purchase a home.  Of those renting, 40% would be willing to buy if down payments decreased from 20% to 5%.  Unbeknownst to them a high percentage of first time home buyers purchase with less than 20% and in many cases as low as 3%.

It seems that the 20% down payment myth has trickled down to the new generation.  However, as first time buyers become more savvy they are starting to take advantage of the numerous financing options that make owning a home more affordable in ever. In fact in many markets including Philadelphia it has become cheaper to own than to rent.  If you have any questions regarding the buying process including financing, contact the Atacan Group and talk to a real estate expert today at 215-592-9522.

 

 

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