It’s no secret that dollars don’t stretch as far as they did for our grandparents. Long gone are the days where you could buy an entire home for under $50,000. Well, at least one that’s live-in ready, that is. A recent Bankrate survey of over 2,500 young adults discovered an interesting method some millennials are using to secure a down payment for a home. How risky is this method?
Bankrate discovered a few things that millennials are more willing to do than older generations to come up with a down payment. Thirteen percent of millennials are willing to dip into their retirement savings. Fourteen percent are willing to move in with family or friends for a bit to bank as much cash as possible. And 12% have resorted to selling personal items. Only 5% of Gen Xers and 2% of baby boomers would have resorted to these measures.
Millennials are also more likely to accept monetary gifts from family or friends, or use a down payment assistance program.
Is this a questionable tactic?
In an interview with MarketWatch, Bankrate mortgage analyst Deborah Kearns said, ““Millennials are having to be very creative and diversify the ways that they’re coming up with their down-payment and closing-cost money,” She went on to say that, “They’re trying to exhaust all their options, and they’re certainly doing that at higher levels than the other generations.”
This rationale can be explained. Most young Millennials believe time is on their side and that there will be many years left to recoup that retirement savings. Financial experts recommend saving for retirement; however, it’s not necessarily a horrible move to dip into retirement savings. They just recommend prioritizing repayment to yourself.