In 2014, Fannie Mae conducted a survey which revealed that 76% of millennials, both renters and owners, believe that owning is the more sensible option. But does that statistic carry over into who is actually buying homes?
On average, millennials are waiting longer to make the switch from renting to buying. In 1980, the average household waited 5 years between renting and buying their first home. Now, that number has bumped up to 6 years.
One of the biggest hurdles for millennial buyers is they usually lack the credit necessary to become a home owner as well as a lack of knowledge about the process.
Most lenders require a credit score of at least 750. If you aren’t sure what that is or don’t know how to improve it, click HERE and HERE to learn more.
Up front, it appears that renting is the cheaper option. This can be extremely important to a young adult who may already be living on a tight budget. However, this may not always be the case.
For example, let’s compare a home in Salt Lake City that costs $200,000 (a $40,000 down payment) and an apartment that has a monthly rent of $1,000.
After three years, the cost of renting outweighs the cost of buying.
Buying a home also offers more customization options than renting. Don't like the carpet in the living room or the color of the kitchen cupboards? It's not a deal breaker because as the owner, you can change it. This isn't always an option when you rent.
If you are planning on building a life in a specific area, buying may also be the better choice. You won't have to deal with rent rising and leases. The payments you make on a mortgage are consistent throughout the entire term of the loan.
Homes are also a better long-term investment than renting. Every payment you make helps build your equity and you will benefit as the price of your home increases.
If you are a first time buyer who needs help with the home buying process, our home loan advisors are here to help. They will be your point of contact as you navigate the path to home ownership and will be available to answer any questions you may have along the way. To set up an appointment with one of our advisors, call (801) 260-7600 ext. 5340 or email mortgages@cypruscu.com.