What Millennials don't know about buying a home

Of late, interest rates have hovered near all-time lows, while job openings and wages have risen steadily. The housing industry has also gained traction since last year. Given these conditions, one would expect that more and more young people would be encouraged to invest in their own homes.

Unfortunately, that is not the case. Young individuals in the age group of 18-34, or millennials, as they are better known, are bogged down by more than $1.2 trillion in student loans, high living costs and even higher rental rates. In such circumstances, saving enough money for a down payment on a home remains for many a distant dream.

To compound problems, millennials also suffer from insufficient credit. According to NerdWallet, a personal finance website, nearly one-third of all millennials have credit scores below 579. The average credit score of people in this age group is 625 - making it the lowest among all generations. Most millennials are not even eligible for the FHA Loan program, which needs a down payment of just 3.5%, as the minimum score requirement for this scheme is at least 640.

The average U.S. household owes more than $129,579, and about $15,355 of that consists of credit card debt. Assuming a rate of 18%, an individual pays roughly $2,630 of interest in credit card loans per year - an amount that could easily be put towards saving for a down payment on a home instead.

According to experts, one of the reasons behind this credit problem may be psychological. A large number of millennials erroneously believe that if they pay all their bills on time, they are financially in the clear. Many have trouble keeping track of their credit card balances - in NerdWallet's survey, one-third of millennials with credit cards said that they are surprised by their bill at least some of the time. There are others who are too scared to even check their bank balances and credit reports. Some haven't applied for a credit card and have no credit history. This makes it difficult for them to secure a mortgage.

One solution is to start taking matters into their own hands. If you are in such a situation, or know someone who is (perhaps a son or daughter), there are tools, such as credit management programs like Mint and CreditKarma, that can help. But they only help if they're used. These tools help consumers create budgets and track their spending. They also teach individuals how to use credit cards appropriately, and not as an excuse to spend beyond their means. If you know someone is such a situation, you can urge them to take control of their financial situation, and learn more about tracking their credit scores, budgeting, consolidating loans, and so on.

If you, yourself, are looking for funds to grow your business, we can help. Fund&Grow has helped organizations in all 50 states create 0% business credit financing with cash access to invest in their businesses. Our team can even help you obtain ZERO interest business credit lines that do not appear on your personal credit report! To know whether you qualify, call us anytime at (800) 996-0270!