Understanding a Top Challenge for Millennials: Saving For a Down Payment
by Jeff Ogden
Senior Vice President of Production at Gershman Investment Corp
As a loan officer working to appeal to millennial clients, it’s essential to understand their unique needs and concerns. For many millennials today, one of the primary challenges is saving for a down payment. While many in this demographic may feel ready to become homeowners, they don’t necessarily have the funds in their bank accounts to make the down payment they need. The good news is that this doesn’t necessarily mean they need to abandon their hopes of homeownership. Instead, with some key adjustments, they may be able to save the money they need to make it happen. Here are some of the most important strategies:
Reassess Current Budget
For millennials who don’t have enough put aside to make a down payment, it’s essential for them to delve into their budget. What are their current spending habits? Which expenses are necessary, and which ones could be reduced? For many, it’s simply revisiting their budget with clear priorities. If homeownership is a top goal, it becomes easier to sacrifice certain things you’ve simply gotten into the habit of spending money on. Get rid of the non-essentials, and recreate your budget from there. How much do you need to save each month to arrive at your down-payment goal?
Consider Creating a Second Income
Sometimes, student loan debt and high rent may mean that even adjusting their budget isn’t quite enough. In these situations, it’s important to evaluate your time availability and your skills. I’m not suggesting taking on another full-time job. But cultivating a side gig of some sort can help millennials rapidly accelerate their saving progress. Anything from tutoring or writing to selling things online can help you bring in extra cash each month, and many of these jobs allow you to create your own schedule. If you can’t get your budget to add up the way you need, consider starting up a side gig to get your numbers where you need them to be.
For those who maybe are not in the habit of saving money every month, automating your savings plan can be a great strategy. Instead of needing to manually transfer money into a savings account on your own, you can have it happen automatically. If you ensure that you’re putting the minimum amount you need away each month, you’ll give yourself a great foundation. If you find you have money left over at the end of the month, any additional savings will get you to your goal even faster.
Create a Plan
Saving for a down payment might take some time, and having a plan can make it easier to hold your course. Forecast how long it will take you so that you know where you are in your journey. It’s also worth researching different programs. For some millennials, they may be able to get a mortgage without the standard 20% down payment. A loan officer could also help you evaluate these different mortgage options.
For loan officers who are marketing to millennials, understanding their needs is a must.