StatePoint) Many millennials are buying their first homes in a marketplace that is more challenging than the one their parents encountered for their first purchase.
Interest rates are on the rise and home prices are, too. The good news is that there are still a lot of reasons that buying a home makes sense for many millennials.
If you are debating whether homeownership is right for you, consider the following:
• Do the math. Purchasing a home can be cheaper over the long-term than renting, even though there may be more upfront costs before closing on that new home. Consider the cost of rent, insurance and annual rent increases against your monthly loan payment, along with how long you plan to stay in the home.
• Know that a home is an asset that may appreciate in value. If market conditions are good, the longer you stay in the property and makes payments, the more equity you build. However, when you rent, monthly payments go to the landlord and there is no opportunity to build equity in the property.
• Don’t let the down payment be a deterrent. Lenders like Wells Fargo offer a conventional fixed-rate loan for first-time homebuyers that allow loan customers to get into a home with a little as 3 percent down. In fact, Wells Fargo’s yourFirst Mortgage just celebrated a milestone of 50,000 households served and $11 billion in loans. The program also provides a $750 closing credit for buyers who take advantage of a HUD-approved home buying education or counseling program. Options like these can make the down payment more manageable.
• Consider the intangible benefits of owning. Are you someone who likes to plant flowers or choose paint colors and floor coverings? Do you have kids and pets who need a backyard? Do you like to get to know your neighbors? Owning a house can offer these benefits and more.
“Deciding whether to buy a home is a big decision for many millennials,” says Perry Hilzendeger, head of Wells Fargo’s Home Lending Retail division. “Potential buyers should understand and consider all the financial options available when purchasing a home.”