How Mom and Dad are helping millennials purchase homes and build wealth.
With the high cost of housing in some areas, it’s not surprising that potential homeowners are looking at creative ways to make a purchase happen. Achieving the dream of homeownership is especially challenging for aspiring buyers under the age of 35. Millennials are often struggling to save for a down payment while financially burdened with ever-increasing rent and student debt.
The family tree.
According to a Zillow estimate, 21% of millennials in the U.S. currently live at home with their parents. It’s becoming more common for this generation to leave the nest later in life in comparison to previous generations. This is a significant jump from the 11.7% who were still living at home 12 years ago1.
With the increase in housing prices, rent, student debt, and overall affordability, millennials have to start thinking of other ways to purchase a home. Millennials today live in a much more varied range of household types such as: living with roommates, an unmarried partner and as we’re seeing, moving back in with their parents.
According to a report dubbed the “2019 Bank of Mom and Dad Report” – parents lent more than $47 billion to their home buying children in 2018. Believe it or not, this makes Mom and Dad the seventh-largest lender in the nation2.
Potentially building wealth early.
Helping family members buy a home earlier than they might on their own can be a smart long-term strategy. An analysis of Panel Study of Income Dynamics (PSID) by Urban Institute suggests that buying a home earlier in life is key to building housing wealth:
“Those who bought their first home between ages 25 and 34 have the greatest housing wealth by their sixties.”
“Those who bought their houses later have significantly lower housing wealth. Ten years of appreciation alone can make a big difference.”
How we can help.
We offer a variety of specialty mortgage product that helps relatives buy together. Our financing does not require that all related co-buyers live in the home. And what’s really special is our financing is available under and over the conforming loan amount, up to $3 million.4 This product not only covers the jumbo market but also for the conventional markets and everything else in between.