Millennials are becoming first-time homebuyers in unconventional ways
Micromortgages may be onto something
For first-time homeowners and friends of homeowners, it’s probably startling to see how much the monthly mortgage expenses are versus rent. For example, in Illinois’ Cook County, the average one-bedroom is $1,161. Meanwhile, my mortgage monthly costs are under $700—and I gasped in 2020 when it hit $704.32. For renters, it may seem illogical for mortgage companies to turn them down for homeownership when they’re paying almost twice the amount (depending on location) each month, and that’s not including utilities, credit bills, living expenses, student loans, etc.
From a mortgage company’s perspective, they want to have a safe bet (if you exclude the Housing Crisis of 2008 with predatory mortgage lenders) and know that this first-time homeowner can afford a six-digit piece of real estate. While rent may be expensive, the tenant can choose to leave a year or two later. Or, if the lease is a month-to-month agreement, even sooner. With homeownership, that person is in it for the long haul. And mortgage companies do not care that your roommate didn’t contribute that month; they want their money.
But first-time homebuyers are growing older and want more stability, and they are finding unconventional ways to become homeowners. Millennials are testing out the waters with vacation homes. Other first-time homebuyers are seeing if a micromortgage is a good idea—although there are two drawbacks: location and interest rates. And others are riding the 2022 wave of house-buying popularity.