More than 1 in 3 mortgages has a "major impact" on the borrower's ability to save. That number jumps to 51 percent for parents who have mortgages.
That's according to Bankrate's Money Pulse survey for February.
MORTGAGES AFFECT SAVINGS
Asked, "How much of an impact does the size of your mortgage have on your ability to save money for the future?" 37 percent of respondents said their mortgage has a major impact. Another 46 percent said it has a minor impact on savings.
There was a big split between parents of children under 18 and everyone else: 51 percent of the parents with children said their mortgage has a major impact on savings, and 27 percent of everyone else said their mortgage has a major impact on savings.
"It's probably not as much about the mortgage as it is that stage of life," says Jonathan Smoke, chief economist for Realtor.com.
Homeowners with children are likely to be in their early 30s to their mid-50s, with competing financial goals:
_Keeping the kids clothed, fed and educated
_Saving for college
_Saving for retirement
_Paying the mortgage
_Maintaining the home
Jim Sahnger, mortgage planner for Schaffer Mortgage in Palm Beach Gardens, Fla., recommends thinking of a mortgage payment as a form of savings.
Homeownership also shelters you from rent hikes and it might convey tax benefits, he says.
THE HOMEBUYING AGE
_15 percent of Americans say they're very or somewhat likely to buy a home this year.
_Older millennials and Gen Xers are the most likely to be in the market for a home.
_Among parents who don't own homes, 2 in 3 say financial issues prevent them from buying.
WHO IS VERY OR SOMEWHAT LIKELY TO BUY A HOME THIS YEAR:
_Younger millennials (ages 18-26): 15 percent
_Older millennials (ages 27-36): 20 percent
_Gen Xers (ages 37-52): 20 percent
_Baby Boomers (ages 53-71): 11 percent
_Silent Generation (72 and older): 4 percent
Regardless of generational labels, "if you had history going back 50 years, you would see this pattern is true in both good times and bad," Smoke says.
People often buy their first homes shortly before or after children are born.
Kevin Hartman fits the pattern.
When he and his wife bought their first house, "I was 29 when we closed and not even a year back from my first deployment to Iraq. I was married to Andrea and we were pregnant with our first baby girl at the time. All three of our kids were born while we lived in that home since we lived there for six years."
They sold that house in Salem, Ore., a couple of years ago, and just bought a town house in Portland.
REASONS FOR NOT OWNING
In Bankrate's survey, 56 percent of parents were homeowners and 41 percent were renters.
Among those parents who are renters, just 18 percent said they don't want to own a home yet. About one-third said they don't own because their credit isn't good enough, and another third said they don't own a home because they can't afford a down payment.
But you don't have to have a big down payment. When Hartman closed on his Portland town house in late January, it was with a Veterans Affairs-guaranteed loan in which he didn't make a down payment. (They had made a down payment on their first home for which they also got a federal VA loan.)
"The cost of living in Portland is such that saving for a down payment is challenging," Hartman says.
And they wanted to keep their savings for emergencies.
Hartman says four sellers rejected his offers because the sellers didn't want to endure the perceived hassle of a VA loan. It turned out that the deal went smoothly.
"I wish there was a way to make, without pulling on heartstrings, how to help sellers and Realtors understand the VA process. There's nothing to be scared of," he says. "If you can add the value of helping a vet, at least consider that."
PERCEPTION VS. REALITY
Zero-down VA loans are one of the perks of being in the armed forces. In qualified rural areas, buyers can get zero-down loans guaranteed by the U.S. Department of Agriculture. Loans insured by the Federal Housing Administration are available with as little as 3.5 percent down, and some lenders offer mortgages with as little as 3 percent down for buyers with low-to-moderate incomes.
Smoke says people "are likely to tell you it takes 20 percent down to buy a home, when in reality it averaged 11 percent last year."
It was even less for FHA and VA borrowers. In 2016, the average FHA buyer made a 4 percent down payment, and the average VA buyer put down 2 percent, according to Ellie Mae.
YOU DON'T NEED PERFECT CREDIT
Sahnger says a lot of people with "credit events" turn out to have better credit scores than they expected.
While it helps to have excellent credit when buying a home, it's not necessary. In December, the average VA buyer had a 707 credit score, while the average FHA buyer had a 686 credit score, according to Ellie Mae. That FHA average score is mediocre. In contrast, the average credit score was 753 for buyers getting conventional loans.
