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Survey Says Millennials Struggle With Homebuying Knowledge

By: Kelly Leighton on in

How much do millennials know about homebuying?

It’s why they need a Realtor®. According to a Lombardo Homes recent survey, 48% of millennials said they cannot confidently define the word appraisal, while a whopping 94% said the same thing about PITI, which is the acronym to represent principal, interest, taxes and insurance. Seventy-two percent said they couldn’t confidently define earnest money and the same with PMI, which is the acronym for private mortgage insurance, said 86%.

Millennials are also struggling with how much housing costs actually are. The report found that a quarter of respondents underestimated their buying means by $150,000 or more. Overall, millennials underestimated what they can afford by nearly $80,000. They also underestimated how much interest would be owed. One-third of respondents underestimated by $200,000 or more in interest, and on average, people estimated $145,000 less than they would owe. Additionally, millennials underestimated how much home values increase by $144,000, with 25% underestimating by $100,000 or more.

More than three-quarters of millennials (76%) do not know if property taxes in their area are high, medium or low, 59% don’t know the seller pays the real estate agent fees and 52% don’t know what the average home in their area costs. Additionally, 47% said they do not know what a good interest rate is.

Lack of knowledge isn’t the only thing stopping millennials. Seventy-one percent said they are struggling to save for a down payment because their rent is so high. Eighty-five percent said they can’t afford a down payment, 67% can’t afford something they want to buy and 63% said they don’t want to be tied to one area.

First-time Buyers Overwhelmed? They Aren’t Alone

“The millennial cohort of homebuyers is unlike any other in history,” said Rick Bechtel, head of U.S. Residential Lending at TD Bank. “They grew up during the explosion of personal technology, the fall of the housing market and the renaissance of the rental market. And as our survey found, their expectations of homeownership are shaped by all of it.”

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