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Trying to get a mortgage with children? Millennials have one piece of advice

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If you grew up a millennial -- or if you raised a millennial -- you know firsthand that this is a generation of contradictions. Millennials have been told since a young age that they're the most competent generation, and they can get anything they set their mind to. But shortly after the late ‘90s, the cutoff for when millennials were born, and the present day, the economic balance in our country changed.

This can make living the American dream a bit tougher than expected. Many, if not most, millennials are crippled by student loan debt. Some have turned to credit cards to get by, only exacerbating their financial problems. Though this may sound like a lonely place to be for a first-time millennial buyer, there's a bright light at the end of the tunnel. Mortgage lenders are paying attention. More lenders are going the extra mile to help millennials turn their dreams of homeownership into a reality. In 2017, the country's largest mortgage financer, Fannie Mae, opened the door of opportunity even wider to make owning a home easier when it raised its debt-to-income ceiling from 45 to 50 percent.

Today, it's more than possible to own a home as a young, millennial buyer when you can find a lender willing to help you clear a few hurdles to get there.

Student loan debt brings seven years bad luck

Even with some obstacles standing in the way, most millennials would still prefer owning to renting if circumstances made it possible. According to a survey by Fannie Mae, two out of three renters would rather buy a house, though overall homeownership has seen a decline and dropped to 63.7 percent in 2015.

What could be standing in the way of the first-time buyer purchasing solo or for a growing family? In most cases, it’s student loan debt — the black cloud that the majority of college-educated millennials can't seem to shake.

In partnership with the nonprofit American Student Assistance organization, the National Association of Realtors conducted a joint study on millennial student loan debt in 2017. The survey found that not only is student debt making it harder for millennials to make financial decisions and achieve their personal milestones, like starting to save for retirement, but it can delay buying a first home by seven years.

More mortgage delays for millennials with children

The struggle is real for millennials-- especially for those who have children. According to the U.S. Department of Agriculture, anAmerican married couple needs about $233,610 to raise a child to the age of 17. With these myriad responsibilities, young parents tend to start the mortgage process even later.

Some millennials have gone so far as to put off having children. With factors like student loan debt and trying to afford a mortgage, it doesn't seem feasible to start a family at the same age their parents did.

Stuck between the proverbial rock and a hard place, millennials have seen the cost of raising a child increase while incomes have remained relatively stagnant. Add to that the fact that student loan debts and housing prices continue to rise. According to the LA Times, developers are currentlymore interested in going after the upper-end luxury market than building starter homes.

Some of the biggest reasons why young parents can’t get a loan might include:

  • Insufficient credit history or credit score.
  • Unable to afford the down payment or the closing costs.
  • Income doesn’t allow them to meet the monthly payments.
  • Have accruedtoo much debt because of student loans.
  • Many lenders offerhome loans with down payments as low as 0 to 6 percent.
  • Monthly payments may be affordable for most of this generation given their average monthly income of $2,940 and the estimated mortgage amount of $945.
  • Surveys also suggest that the average time to close a loan now sits at the lowest it’s been in years.

Light at the end of the tunnel: Lenders work to accommodate millennials

Headlines, recent studies, and the state of our economy paint a bleak picture for the youngest generation of buyers, but mortgage lenders insist there are still options for millennials. Another roadblock? Millennials are typically unaware of the alternatives available to them, like low and no down payment loan programs and tech tools that can help in getting through the mortgage process more efficiently.

Around 42 percent of millennial buyers don’t even know the expectations of lenders; they oftenassume they won’t be able to get a mortgage because of their current financial status. However:

Fortunately, there’s some help on the horizon for millennials who want to buy and who need extra guidance. Cornerstone Home Lending, Inc., designed their free mortgage app LoanFly to make buying a house easy, fast, and friendly. Features like instant credit access, 15-minute prequalifications, and a completely mobile loan process were built with millennials in mind. LoanFly has distinguished itself among other mortgage apps with its ease of use, allowing millennial buyers to find out how much house they can afford before they even start house-hunting. Using LoanFly, millennial buyers can also stay in touch with their loan officer and get their personal mortgage questions answered at a click.

Millennials who've taken advantage of these options and have bought their first house have an important message for other young buyers who find themselves in their shoes: Buy early, if you can, and start building your equity now. You'll thank yourself later. As the second annual Bank of America Home buyer Insights Report confirms, published in 2017, 86 percent of millennial buyers find owning to be more affordable than renting. And 60 percent would tell their younger selves to start saving up for their first house sooner.

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