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.