The power of debt forgiveness
Politicians have been tossing around the idea of student debt forgiveness for years. Though an official policy has yet to be passed, new data shows it would be monumental for Millennial homebuying prospects if enacted.Verify your new rate (Jul 5th, 2020)
According to a new analysis from Redfin, forgiving $50,000 in student loan debt (Sen. Elizabeth Warren’s current plan) would make Millennial homebuying significantly easier. Without student debt to contend with, Millennials could buy a home three years faster, on average.
Redfin’s data shows it currently takes the average Millennial 12.3 years to pay off their student loans and save up enough for a 20 percent down payment on a median-priced house. With $50,000 less in loan debt, it would take them just 9.4 years.
It would also have a huge impact on housing in general. As Daryl Faithexxrweather, Redfin’s chief economist explains, “The idea of taking on a mortgage when you’re still paying off tens of thousands of dollars in student loans is a non-starter for many people. If student debt were eliminated, college grads would be able to start building wealth through homeownership, laying down roots and contributing to their communities years earlier in their lives. An influx of young, educated homeowners could have positive impacts on neighborhoods and society at large.”
Where Millennials would benefit the most
The impact would be even bigger in certain parts of the country. In Memphis, for example, student loan forgiveness would shave 4.3 years off the homebuying process.
Millennials in Birmingham, Alabama, would also be able to buy a home four years sooner if they had $50,000 less in debt.
The cities where debt forgiveness would impact Millennial homebuying the least are higher-priced ones along the West Coast. In San Francisco, it would save buyers 1.6 years, while in San Jose, it would mean just 1.2 years saved.
Get today’s mortgage rates
Millennial homebuying is on the rise. What to join the movement? Then shop around and see what mortgage rates you qualify for today.Verify your new rate (Jul 5th, 2020)