The recent order by President Joe Biden canceling tens of millions of dollars in student loan debt is good news for the Boston condo for sale industry, according to a new report.
While many millennials already own homes, student loans forgiveness could play a role in increasing rates of millennial homeownership.
According to a survey by Rocket Mortgage, 64.3% of millennials haven’t paid off their student loans. While these loans won’t necessarily prevent them from buying a Boston condo for sale, they contribute to financial insecurity that can prevent millennials from taking the leap into homeownership.
The U.S. Census Bureau reports that when it comes to millennial borrowers, 56.8% own homes. However, 55.9% of those in this group are still making payments on their student loans. Given the fact that millennials took out a median of $40,000 to $60,000 to pay for school, that’s a significant financial barrier.
Homeownership has always been higher among student loan borrowers, likely due to higher education and income levels. Rocket Mortgage also reported that of millennial borrowers who own homes, nearly 50% bought their homes during the period after the Great Recession. Surplus housing, low interest rates and down-payment assistance plans allowed many millennial borrowers to purchase homes regardless of their student loan status.
This number has decreased significantly in recent years, thanks to the competitive housing market and the COVID-19 pandemic. However, 63% of home purchases between 2020 and 2022 were still made by millennials with outstanding student loans — indicating that the pause on student loan payments has given many millennials the opportunity to save for homes.
The question at hand is how eliminating student debt may influence millennial homebuying. Rocket Mortgage found that 19.2% of millennials who think they won’t buy a home simply don’t believe they can afford it.
While many millennials are still planning on buying homes regardless of whether their student loans are forgiven, nearly 70% of millennial borrowers believe they could achieve their dream of homeownership years sooner if student loan forgiveness becomes a reality.
Rocket Mortgage also found that the concept of student loan forgiveness doesn’t impact the amount millennials plan to spend on houses.
Updated: Boston Real Estate Blog 2022
How student loans can prevent you from buying a Boston condo. A growing number of people looking at Beacon Hill condos for sale have student loan debt that can take many years to pay off.while you continue to payoff your debt, life is still going on, and you may end up wanting buying a Boston high rise condo for sale. Here’s how student debt can prevent you from accomplishing your goal of obtaining your dream home.
When you apply for a mortgage to to buy a Boston high rise condo, the bank will check your credit report to see if you have any other preexisting financial obligations.. Any oustanding payment obligatons will lower the amount a bank is willing to loan to you.
Any sort of loan debt on your credit report makes you look like a riskier investment to the bank. so if you have multiple student loans your payment obligation may appear inflated. In this case, it is best to consolidate multiple student loans into a single loan.
Student Loan Delinquencies
If you have a student loan, you should try to pay it off without any delinquincies. Missing patments on a student loan can make it difficult to obtain a mortgage for your dream Boston condo for sale that you want to buy. Lenders will be very cautious about providing you a loan if you seem unlikely to be able to pay it back.