Millennials: Trade your Student Loans for a Mortgage.
As we noted in an earlier blog, it’s no secret that mounting student loans have made it difficult for Millennials to buy homes. Eagle Home Mortgage, the lending arm of South Florida’s largest homebuilder, Lennar Corp., is proposing a new solution to try and remove this common financial obstacle. Lennar Corp recently launched a millennial mortgage program that offers to pay off up to $13,000 in student loans for borrowers who purchase a new home from Lennar.
A Significant Impediment to the American Dream
How much of a negative impact do student loans have on Millennials wanting to buy homes? In a recent study on millennial student loan debt released by the National Association of Realtors® and nonprofit American Student Assistance®, of the 80% who said they do not own a home, 83% said their student loan debt affected their ability to buy. The same study even noted that the average delay in home-buying was seven years. A recent survey conducted by Credible, a personal finance website, showed that 50% of Millennials surveyed stated that they would sacrifice their right to vote during the next two presidential elections in exchange for not having to make another loan payment.
The Fine Print
Lennar’s program does have fine print. Taking advantage of the Eagle Home Mortgage offer comes with certain conditions. According to Housing Wire, borrowers who use this program are able to direct up to 3% of the purchase price towards payment on their student loans. However, the borrower must purchase a new home from Lennar. Also, the program’s maximum loan amount is $424,100, and credit and income requirements must also be satisfied.
Is this the start of a new trend in the real estate market? Quite possibly. It is a step in the right direction, as various companies, including banks and developers, are beginning to acknowledge the significant setbacks of high student loan debt, including a void in the real estate market as Millennials forgo traditional first-time home-buying. Perhaps more solutions will be proposed to not only address the growing $1.3 trillion student loan debt issue, but also to further the dream of home ownership.
From the trenches,