Three Reasons 2015 is the Year
of the Millennial Homebuyer
Shikma Rubin
Tidewater Home
Funding
“Roughly 42 percent of millennials say they want to buy a home
in the next one to five years…
As this generation matures, they
will become a home-buying force
to be reckoned with.” – Dr. Stan
Humphries, Zillow chief economist
Welcome to 2015, the year
many home-buying experts like
Humphries expect millennials to
enter the housing market in a big
way. As a mortgage lender who specializes in home loans for millennials (those born between 1980 and
2000), I keep close watch on new
federal and state policies that may
impact young adults who want to
buy homes. Here’s what you need to
know:
1) Student Loan Relief – Until now, the federal Pay As You Earn
program allowed newer borrowers
to cap monthly student debt payments at 10 percent of a person’s
disposable income. Starting in 2015,
the government has expanded the
program to people who took out
student loans before October 2007
or stopped borrowing by October
2011.That’s almost 5 million more
(mostly young) people who will feel
relief from student debt and potentially have more money to buy a
home.
I am one.
2) 2.3% Down Payment –
Also at the national level, Freddie Mac and Fannie Mae both
Five cities in
Hampton Roads
are considered
"millennial magnets."
announced a 3% down payment
program for conventional loans,
down from 5 percent. The lower
down payment still comes with
PMI, or private mortgage insurance,
but unlike FHA loans the premium
drops off after the borrower reaches 20% equity in the property.
3) Virginia Savings Plan –
Closer to home, the Virginia General Assembly approved legislation
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in 2014 for the First-Time Homebuyer Savings Plan. The plan allows
people to set aside up to $50,000 toward the costs of closing on a new
home. The best part: earnings from
the savings account are free from
Virginia state taxes.
Let’s recap: In 2015, we now
have student debt relief for more
people plus a 3 percent down payment option and tax-free savings
account for first-time home-buyers.
In total, the changes make the landscape ripe for millennials to enter
the housing market in much greater
numbers.
Oh, and one more piece of
positive news. Late last year, USA
TODAY identified eight Virginia
cities as “millennial magnets,” places where young people continue to
move and thrive. On the list? Norfolk, Newport News, Hampton,
Virginia Beach and Chesapeake.
Like Humphries said, 2015 is
the year of the millennial homebuyer. Make sure that you’re armed
with the facts and ready for what’s
to come. ~
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HAMPTON ROADS REALTOR ® ~ FEBRUARY 2015 p. 19