Young adults may need more resources for learning about mortgages and homeownership. More than half—55%—of young adults recently surveyed say that they’re lacking knowledge on homeownership and mortgages. That confusion has prevented them from becoming a homeowner, according to a new survey of 1,000 consumers between the ages of 23 and 38 conducted by LendEDU, a personal finance resource.
Homeownership preparation is not typically taught in high schools or colleges. “Homeownership, especially by way of a mortgage, can be an incredibly complicated topic for the average consumer,” the survey notes. “Sometimes this complexity leads to intimidation, which can prevent someone from ever taking the jump into homeownership.”
LendEDU researchers posted quiz-like questions to respondents to gauge what exactly they knew and where there were gaps in their knowledge. One of the biggest areas of confusion: down payments. Survey respondents reported that the minimum down payment they felt they needed to buy was 37% of the home’s total purchase. But while 20% is often considered the ideal amount, buyers have many opportunities to get down payments as low as 3%. By overestimating what they need for a down payment, some millennials may be waiting on the sidelines to homeownership, the authors note.
Millennial respondents also estimated that the mortgage process took longer than it actually does. In general, they responded it took 72 days from start to closing; in reality, the mortgage process usually takes around 30 days.
Source: “Why Aren’t Millennials Becoming Homeowners? Some Cite a Lack of Knowledge or Savings, Others Point to Student Debt,” LendEDU (Aug. 20, 2019)
