More than half of younger adults in a recent survey say they lack knowledge about homeownership and mortgages, and the findings demonstrate they may need more resources to learn about these things, the survey authors say.
LendEDU, a personal finance resource that carried out the survey of consumers aged 23 to 38, said that confusion over the home buying and mortgage application process has likely prevented many younger people from becoming a homeowner.
One problem is that homeownership preparation is not taught in high schools or colleges.
“Homeownership, especially by way of a mortgage, can be an incredibly complicated topic for the average consumer,” the survey noted. “Sometimes this complexity leads to intimidation, which can prevent someone from ever taking the jump into homeownership.”
LendEDU researchers posted quiz-like questions to respondents in its survey to gauge what exactly they knew and where there were gaps in their knowledge. One of the biggest areas of confusion was the subject of down payments. Survey respondents reported that the minimum down payment they felt they needed to buy was 37% of the home’s total purchase. But while 20% is often considered the ideal amount, buyers have many opportunities to get down payments as low as 3%. By overestimating what they need for a down payment, some millennials may be waiting on the sidelines to homeownership, the authors said.
Millennial respondents also estimated that the mortgage process took longer than it actually does. In general, they responded it took 72 days from start to closing; in reality, the mortgage process usually takes around 30 days.