Solutions Exist for the Home Buying Challenges Millennials Face

By
Mortgage and Lending with NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 IL Lic 031.0006220/WI
https://activerain.com/droplet/5kZ6
 
 
Are You a Millennial Hoping to Buy a Home?
Solutions Exist to Address the
Challenges You Face
 
 
 
It's no secret ...  
 
Today's younger generation is finding it much more challenging to buy a home than their parents did.  That's troubling and sad, as 9 out of 10 millennials report they want to buy a home.  
 
A recent revealing survey released by Apartment List shows that:
 

 

1.  Only 4.9% of those millennials      (those born 1981-1996 (22 to 37  years old) that want to buy a home say they will achieve their homeownership goal within the coming year  

2.  Around 34% of those hoping to buy a home believe they'll have to wait over 5 years to do so 

 

The culprits robbing these young people of their home buying dreams have been well-documented.

 

Those are:  

 

  • Increasing home prices 
  • Student loan debt 
  • Poor economic factors 
  • Inability to save money for a down payment 
  • Additional personal factors

 

...  each shares equally in delaying or eliminating their homeownership opportunities.

 

Modern social factors also contribute to the younger generation's home buying malaise as well.  Many are deciding to wed or have children later than their parents did.  (Each has historically served as a great motivator and catalyst for home buying.)


While I've written multiple times in the past on the subject of down payments, the availability of low/no down payment mortgage programs, and the option to use "gift monies" as a source for down payment and closing costs ... or utilizing a co-mortgagor/co-signor when buying a home ... a quote contained within a recent article I read on BuzzFeed.com convinced me it was time to broach these topics again.

 

The BuzzFeed article showcased many hard truths being faced by current hopeful home buyers.  It also revealed this fact ...  

Avenues to buy a home can and do exist for many. 

 

Financial assistance is possible and available in various forms.  One such form is gift monies.  

 

Granted, homework, including required documentation and paperwork, may need to be performed in order to utilize this option.  But an experienced lender will assist and advise their client throughout any challenges faced.  That means that, with their assistance and guidance, most younger buyers can find solutions and buy ... or at minimum, get on the path to buying sooner than they thought possible.

 

That was true (and duly noted) for many of those interviewed within the BuzzFeed article.  One interviewee who themselves was a recipient of parental gift funds stated that they "didn't know anyone in their twenties who has the savings for a down payment without family help.”  


Now their experience may be a bit out of the norm because as a mortgage lender, I can testify that I've personally worked with many homebuyers in their 20's that have successfully purchased on their own.  Gift monies were not involved in the purchase of their home.  

 

However, the statement is correct in reinforcing the fact that monetary gifts are a valuable tool and often-used solution.  When financially capable, many parents or family members (must be related to you by blood, marriage, legal guardianship, or adoption) are willing to offer funds that will enable their children to buy a home.  

 

It must be noted, however, that additional rules and regulations can also come into play during these financing scenarios.  They will be dependent on the mortgage program used, the applicant(s) credit scores, the property they are purchasing, or more.  

 

As always, it's important to follow the instructions and guidance provided you by your Lender, as they will be based on your individual borrowing scenario.  But in the majority of transactions involving gift monies, these are basics that typically apply:

  • Gift funds must truly be gifts.  There can be no expectation of future repayment between the provider of the funds and the recipient.  (A Gift Letter will be required by the Mortgage Lender in order to secure Mortgage Approval.  Please see me for instructions.) 
  • Co-Signors/Co-Mortgagors alike must be prepared to have monies/accounts/down payments verified, along with their employment, credit/debt, and more, just as the actual home buyer will. 
  • Borrowers cannot accept "Cash" or "Gifts of Cash" from parents/relatives and then deposit it into the banking account for which the funds for Closing later get verified.  
    Cash has NO acceptable means of being verified or counted as acceptable funds to Close by a Mortgage Underwriter.
  • Checks from Non-Borrowing, Non-Buying Parties can cause problems.  Please check with me prior to taking actions surrounding gift monies.  I will instruct you as to the correct way to provide-and-or-accept gift funds.      

 

Both Benefactor and Recipient should also know:

  • When agreeing to borrow with a daughter/son/relative, parents/relative are taking on a legal responsibility of equal measure with the child/homebuyer when they sign on their Note and take on mortgage debt. 

  • Involvement in gifting of funds or co-signing on another's loan can impact the parents/relatives' ability to borrow money in the future, either by limiting the funds available or full loan denial.

  • Any parent/relative considering the gifting of funds should talk to their Tax Advisors or Financial Planners first.  That way they are fully educated as to the tax implications and impact of gifting these funds. 

  • The same goes for parents thinking of becoming a Co-Signer.    

  • Have conversations with Tax Advisors, Financial Planners and myself  (your Mortgage Originator) prior to entering into any verbal or written obligation with your child.  That way you are fully aware of your financial and legal obligations when doing so, as well as your emotional ones.

     

It's commendable when parents (or relatives) wish to assist a young home buyer in the purchase of a home.  The extent of their generosity should never be underestimated or overlooked, as at today's beneficial low-interest rates home buying can be an extremely wise financial move.  The savings can be immense.

 

But other options for buying and financing, such as Co-Signors/Co-Mortgagors and more exist and can also help millennials buy a home.  Some demanding less money or downpayment than you thought necessary to buy.  

 

A large or 20% down payment is not needed for these Low/No Down Payment Options that exist today:

 

  • Federal Housing Administration (FHAfinancing option is still available. It remains available to those Buyers with as little as a 3.5% Down Payment
  • Conventional Loans are available with 3% Down Payment * with Fannie Mae's HomeReady Loan, among others

 

Loan Options exist today with little or NO Money Down.  They are:

  • VA:  100% Financing for Qualified Military Veterans 
  • USDA-RD:  100% Financing for Certain Qualified Rural properties/locations
  • FHA:  $100 Down Payment for Qualified HUD-owned properties
  • IHDA *:  Down Payment Assistance Financing. Income Limits Apply. Funding is limited. Restrictions are also in place and apply. (* Illinois Housing Development Authority. Can be used for the purchase of IL properties only
 
And of special note here:  While FHA and Conventional Loan Programs require 3.5% Down (FHA) and 3 - 5% Down (Conventional), these Down Payment Funds can be GIFTED by relatives (within certain guidelines as to the Donor's relationship to the Borrower(s).  
 

The bottom line is that if you want to buy a home, don't give up.   

 

Options and opportunities specific to your financial scenario might exist that would make it possible for you to realize your home buying dream.  But you're not going to know for sure until you talk to a lender.

 

So if you dream of becoming a homeowner, take action and get on the path to home buying success!  Contact me ... or your own mortgage lender when you seek to buy a home or assist in the buying of a home or investment property with or for others. 

 

 

* Hoping to buy or refinance a home or investment property in New Lenox - Will County or elsewhere in the Chicagoland - IL - WI area?

Contact me today. I'll put my 40+ years of mortgage experience hard to work on your behalf.
I'm easily found at:

 
 
Gene Mundt
 
Mortgage Lender - NMLS #216987 - IL Lic. #0006220 - WI Licensed
 
 
American Portfolio Mortgage Corp.
NMLS #175656
 
 

 

Direct: 815.524.2280
Cell/Text: 708.921.6331
eFax: 815.524.2281
 

 

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Gene Mundt

 Mortgage Originator  -  NMLS #216987    

                                 IL Lic. #031.0006220  -  WI License #216987                                                                                                    

NMLS #175656

 

Gene Mundt, Mortgage Originator,  40+ years of #mortgage experience, will offer you exemplary mortgage service and advice when seeking:  #Conventional, #FHA, #VA, #Jumbo, #USDA, and Portfolio Loans in #Chicago and the greater Chicagoland region, including:  The #Lincoln-Way Area, #Will County, (#New Lenox, #Frankfort, #Mokena, #Manhattan, #Joliet, #Shorewood, #Crest Hill, #Plainfield, #Bolingbrook, #Romeoville, #Naperville, #Wilmington, #Peotone, etc.), #DuPage County, the City of Chicago, #Cook County, and elsewhere within IL and Wisconsin. 

 

Your Referrals & Testimonials are Always Greatly Appreciated! 

 

 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Roy Kelley 10/10/2019 01:00 AM
Topic:
Lending / Financial
Location:
Illinois Will County New Lenox
Groups:
Realtors®
Mortgages
Chicago Area Real Estate BUZZ!
1st Time Buyers
Bananatude
Tags:
mortgage options
first time homebuyers
gift monies
down payment options
millennials
millennials buying a home
home buying advice and tips
parental gift monies
home buying solutions

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Rainmaker
1,944,342
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi - I certainly have found that most millennials want a home.  Those who do find a way.  I would certainly tell anyone in Chicagoland to talk to you to get it done.

Oct 07, 2019 08:14 AM #1
Rainmaker
3,133,625
Nina Hollander
Coldwell Banker Residential Brokerage - Charlotte, NC
Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor

Great explanation on gift money, Gene. I think it's something that is "known" but whose "inner workings" are not so well known.

Oct 07, 2019 10:53 AM #2
Rainmaker
2,036,697
Patricia Feager, MBA, CRS, GRI,MRP
DFW FINE PROPERTIES - Fort Worth, TX
Selling Homes Changing Lives

Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi - I went to my local Economic Forecast Event last week and they said the same thing about Millenials.

Although I do believe in further education past High School, I don't think young men and women should be forced or encouraged to go into debt to earn a College and/or University Degree if they aren't ready to make up their minds, or they are content to learn a trade. There are too many with student debt that may never achieve a good-paying job to save up enough money to pay back the loans and save for a down payment, the mortgage, insurance, taxes, possible HOA, health insurance, and still have a quality of life while beginning a family or remaining single. 

It's very sad to hear that many are set up for failure.  

Oct 07, 2019 12:23 PM #3
Ambassador
3,822,557
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Gene purchasing home is becoming more and more challenging for all age groups.  It is our job to guide them through the process of home ownership.

Oct 07, 2019 01:40 PM #4
Rainmaker
785,101
Nick Vandekar, 610-203-4543
Long & Foster Real Estate Inc 610-225-7400 - Devon, PA
Tredyffrin Easttown Realtor, Philly Main Line

I had friends who last year helped their daughter buy a home with gift monies, and the verification process really upset the Dad who is a very private person. But it all came together in the end and she is very happy in her home.

Oct 07, 2019 02:40 PM #5
Rainmaker
2,772,745
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It’s always important to be honest about finances even in the worst of circumstances were the ones we might see as too embarrassing.

Oct 07, 2019 09:26 PM #6
Rainmaker
2,772,745
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

I do find when you resolve to make things happen and you don’t waver, that’s when the miracles happen most often. Nick Vandekar, 610-203-4543

Oct 07, 2019 09:28 PM #7
Rainmaker
2,581,961
Brian England
Arizona Focus Realty - Gilbert, AZ
MBA, GRI, REALTOR® Real Estate in East Valley AZ

I love working with millennials that do things the right way, save up money and buy their first home as soon as they can.

Oct 08, 2019 06:35 AM #8
Rainmaker
2,464,514
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

I see this generation & where they are different & I know they see mine too. What I do is stand ready to help them navigate through a subject just like I was helped so as to have quality of life. I know Gene feels the same way...

Oct 08, 2019 06:52 AM #9
Rainmaker
5,425,106
Roy Kelley
Realty Group Referrals - Gaithersburg, MD

Thank you very much, Gene, for sharing your experience and your advice.

Oct 08, 2019 09:18 AM #10
Rainmaker
205,797
L. Scott Ferguson
Ask4Ferguson - Your House-SOLD Name in Real Estate - West Palm Beach, FL
Sunny Florida Real Estate Professional

Great post and thanks for the info.

 

One thing I'm finding with millennial's is that they have entitlement issues. Like others in this thread have said, if they want to buy, they will find a way.  I hold seminars monthly targeting millennial's here in South Florida and out of the 20-30 I have attend.  I get 3-4 on board looking for guidance.

 

Again, thanks for the post and info.

 

Blessings

Oct 08, 2019 11:49 AM #11
Rainmaker
1,166,184
Jane Peters
Home Jane Realty - Los Angeles, CA
Los Angeles real estate concierge services

More valuable information. It sounds easy to use gift money to assist in the downpayment. it is not that simple as you clearly point out. Borrowing....

Oct 08, 2019 02:27 PM #12
Ambassador
2,878,982
Anna Banana Kruchten - Phoenix Homes Sales
Phoenix Property Shoppe - Phoenix, AZ
603-380-4886

Hi Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi really good information for 1st time home buyers that want to buy a house but have no idea of how to even begin to prepare to do so. Excellent round up of ideas!

 

                                                  Featured in BananaTude

 

Oct 08, 2019 02:43 PM #13
Ambassador
4,013,782
Jeff Dowler, CRS
Solutions Real Estate - Carlsbad, CA
The Southern California Relocation Dude

Hi Gene:

As you always do you provide some great insights into issues facing buyers, in this case Millenials, but also offer some good solutions!

Jeff

Oct 08, 2019 08:35 PM #14
Rainer
479,714
Kimo Jarrett
WikiWiki Realty - Huntington Beach, CA
Pro Lifestyle Solutions

The challenge millennials have IMO is discipline and personal sacrifice. Most have no financial education about how money works and are unwilling to sacrifice their lifestyle temporarily to achieve their goals and objectives if indeed they want to buy a home.

How can anyone save enough for a down payment if unwilling to buy a starter home to reduce their taxes and grow their savings to move up with equity appreciation or passive income opportunities. 

The solution is to employ a knowledgeable and experienced Realtor and create an action plan to buy a home and start the plan immediately. 

Oct 08, 2019 08:48 PM #15
Rainer
526,547
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Millennials issues need to be dealt on whole different scale.

Modern social factors also contribute to the younger generation's home buying malaise as well.  Many are deciding to wed or have children later than their parents did.

Oct 09, 2019 04:40 AM #16
Rainmaker
1,086,806
Margaret Goss
Baird & Warner Real Estate - Winnetka, IL
Chicago's North Shore & Winnetka Real Estate

You've written an informative guideline for young people to follow when considering buying a home. Or more particularly, for those who thought they never could. There's more than one way to skin a cat (I like the saying but hate the imagery!)

Oct 09, 2019 11:42 AM #17
Rainmaker
522,310
Mary Hutchison, SRES, ABR
Better Homes and Gardens Real Estate-Kansas City Homes - Kansas City, MO
Experienced Agent in Kansas City Metro area

There are not many relatives that can gift thousands of dollars to a young person for a down payment...but I have seen it happen.  This is why I want to buy a small house now and rent it out..so at some point, my kids have a place to live!

Oct 09, 2019 03:24 PM #18
Rainmaker
392,171
Marney Kirk
Cummings & Co. Realtors - Towson, MD
Towson, Maryland Real Estate

Gene, this is a terrific article on how to potentially solve a problem for homeownership. Thank you for the link to the BuzzFeed post too - I like to also read where ideas begin!

Oct 10, 2019 05:19 AM #19
Rainmaker
2,772,745
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

Where there is a will there is always a way in almost every circumstance, In my opinion and you just have to kind of flush it out and fight through the BS.

Oct 18, 2019 10:03 PM #20
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Rainmaker
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Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi

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