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Millennials are stressed about home ownership: Here’s how to ease those worries

Erik J. Martin
The Mortgage Reports contributor

Millennials are deeper in debt, have less money than their parents did

Gen Y has a lot on its mind.

For one, they’re in a lot of debt: The average 18- to 34-year-old has around $36,000 in personal debt according to CNBC, most of it for student loans. They also have less money than their parents did at their age. And many have trouble affording their first home. It’s no wonder why millennials are stressed.

In fact, new data show that millennials are stressed about owning a home more than baby boomers are. They’re also more inclined to regret their home purchase than older generations.

It’s normal to feel some nervousness about buying and owning a home. But young buyers shouldn’t let their concerns become overwhelming anxieties.

If the time is right and they can afford it, Gen Y should embrace the prospect of owning with positive excitement, the pros suggest.

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What the research found

A new report by Clever Real Estate had some interesting findings. Among its revelations:

  • Millennials are stressed about homeownership twice as much as boomers (27% vs. 13%, respectively).
  • These young buyers are nearly three times as likely to be “anxious” about owning a home than boomers (19% vs. 7%).
  • Gen Y is more likely to feel buyer’s remorse after purchasing than boomers (52% vs. 21%, respectively).
  • The biggest reasons why millennials suffer buyer’s remorse are:
    • Mortgage payments that are too high (41%)
    • The house requires too much maintenance (33%)
    • The home lacks features needed (23%)
    • Their property has depreciated in value since purchase (21%)
    • Their house is too small (17%)
    • High interest rates (17%)
    • Location isn’t ideal (14%)
    • Poor quality school districts (10%)

The fix-it generation

Millennials are also more inclined to buy a fixer-upper, commit to major renovation projects, and use their homeowner’s insurance than boomers.

Gen Y is more likely than boomers to finance their renovations. To do this, they use:

  • Credit cards (39% vs. 20%)
  • Personal loans (26% vs. 9%)
  • A home equity loan, cash-out refi, or HELOC (17% vs. 15%)
  • Support from family or friends (7% vs. 3%)

But home improvement costs aren’t the only thing this generation has sticker shock over. Four in 10 millennials were surprised by the cost to maintain their homes.

More responsibility than expected, higher costs than they hoped

Ben Mizes, CEO of Clever Real Estate, isn’t surprised by many of these results.

“Millennials appear to be more stressed due to their investment of money and time in buying and owning a home. When you buy a home, no one tells you about having to fix the leaky roof or having the air conditioning break in the middle of summer. It’s more responsibility than they were expecting,” he says.

Also, real estate agents, lenders and other experts they turn to often don’t prepare millennials properly for these duties.

“They often don’t tell young buyers about these extra costs. So when the bills start piling up, it causes buyer’s remorse,” Mizes notes.

Michael Mesa, Certified Mortgage Planning Specialist with Fairway Independent Mortgage Corporation, agrees.

“Most buyers today never meet their lender in person,” says Mesa. “So combine the speed at which the transaction moves with the inability to connect in person and have a face-to-face meeting to gauge comfort and determine competency. That can result in a less educated buyer and a less confident owner.”

Other factors weighing on young buyers

Combined debt is also contributing to the pressure millennials feel.

“I think millennials are stressed about ownership more than previous generations due to mounting student loan debt. That debt means they have less money to devote to a down payment,” says Kara L. Stachel, real estate attorney with Stachel Law Planning, PLLC. “Then, they are forced to borrow more money and obtain mortgage insurance. That limits their ability to pay off the loan faster than their actual maturity date. And it leaves the owner with less equity in their home.”

Remember, too, that millennials are buying more fixer-uppers. “So they’re dealing with more problems on older homes,” says Mizes.

Boomers, by contrast, are less frazzled by these matters.

“They’ve had more time to understand the commitments of home ownership. And with age comes wisdom,” adds Mizes.

How to combat buyer’s remorse as a millennial

Maybe you’re thinking about buying a home. Or perhaps you’ve recently purchased one. Regardless, it’s important to put things in proper perspective. And it’s not healthy to let housing matters overwhelm you.

“Keep in mind that owning real estate is still one of the best methods for building wealth. And it can be worth buying a home and building equity sooner versus later,” says Stachel.

“But while they shouldn’t rent forever, millennials also should not overextend themselves to make a home purchase. They should factor in all the unexpected costs—including property taxes, insurance and maintenance.”

If you haven’t bought yet, Mesa recommends taking action steps to increase your confidence:

  • Choose and consult with a skilled mortgage lender. Ask lots of questions. Determine what payment is comfortable for you financially. Learn what your borrowing responsibilities are. And get preapproved to put you on a faster track to funding.
  • Select an experienced and reputable real estate agent. This person should also be able to answer all your questions and help you fully understand the buying process.
  • Choose the home with your heart, but purchase with your head. “Don’t have the funds or can’t afford it? Then it may be time to adjust your criteria for a home to a level that won’t cause grief and regret later,” Mesa says.

Lastly, realize that it’s natural for first-time owners to feel some buyer’s remorse.

“Nearly eight in 10 millennial buyers have never owned before, so everything is new for them. But it’s not worth continually stressing over,” says Mizes.

Millennials shouldn’t fear home buying

Home buying certainly isn’t right for everyone. But for those who are stable in their careers and ready to set down roots, homeownership is a key to wealth later in life.

Check your readiness to buy a home below. There’s no obligation to proceed and pre-approvals are quick for many applicants.

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