A recent national poll found that nearly 1 in 5 millennials (the generation born from the early 1980s to the late 1990s) feel that homeownership is a smart decision but that it isn’t financially viable for them. Facing high unemployment, lack of wage growth, high student loan debts, high housing prices and tight credit, millennials may think buying a home in Denver is impossible.
If you’ve been thinking you’ll have to rent forever (or that your kids will never be able to afford a home of their own), we’ve got good news: Homeownership is possible!
Millennials can afford to buy a home.
With a thriving job market and off-the-charts livability, Denver is a great place for millennials to put down roots. If you’re a young person thinking about buying your first home (or know someone who is), here are factors to consider:
- Buying a home is a long-term investment. If you expect to relocate soon, renting may be a better option for now.
- A mortgage payment can be less expensive than renting. Although the rate of increase has slowed recently, rents in Denver remain high, while mortgage interest rates are relatively low.
- If you’re already leasing a home, ask about options for buying it.
- The first home you buy is just that: Your first. You can upsize or upscale later! And in Denver, you can expect most homes to hold their value.
- Although young buyers may be priced out of the trendiest and toniest neighborhoods, there are still plenty of deals to be found in the Denver metro area.
- The cost of insurance and property taxes will likely roll into your mortgage, but take those costs into account, particularly in neighborhoods where property taxes are increasing rapidly.
- As a homeowner, you’ll need to budget for related expenses such as home maintenance and HOA fees.
- Although roommates can help cover the mortgage, buy a house you can afford on your own, or budget for a rental income gap.
- If you’re able and willing to put some work into improving your first home, you may be able to flip it and sell at a profit.
- In a tight housing market, allow yourself plenty of time to find the right property to invest in.
A common misconception is that you’ll need a 20 percent down payment, which is out of reach for many millennial homebuyers. But there are a number of ways to reduce a down payment, including a Colorado Housing and Finance Authority program that is only 3 percent down with a grant of 3 percent of the loan amount. For example, if you’re purchasing a $200,000 property, your down payment would be $6,000; subtracting the $6,000 from the purchase price of $200,000 leaves you with a loan amount of $194,000. You then apply for a grant for 3 percent of that loan amount. You would receive $5,820 back from CHFA, thereby reducing your down payment to $180!
Our advice is to be realistic about what you can afford, create a financial plan, talk to a mortgage expert, and explore the market with a real estate agent who understands your goals. At InTransit Properties, we specialize in helping people find an affordable home that is a good investment in their future.
Contact us at 303-388-5200 or by email to discuss your goals.
For more information on financing, contact Chris Klapp at America’s Mortgage, 720-493-8844 or firstname.lastname@example.org. (Please mention this InTransit Talks article.)