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Why aren't millennials applying for home loans?

Millennials, the common narrative runs, have unprecedented debt levels. As soon as they graduate, they owe so much money that it's almost overwhelming.

This is not true. People between the ages of 25 and 35 actually have seen their debt decline over the last 13 years. In 2003, the average was $41,761 for someone who was 29. Now, the average at the same age is $36,810. You may hear a lot about debt for this age bracket, but they technically don't owe as much as the previous generation.

So, why aren't they buying homes and getting mortgages as often? This is actually why they have less debt. Today, their debt is largely tied up in student loans. They owe this instantly, and there's no tangible asset backing it up; you can't sell the piece of paper your diploma was printed on to pay off the loans.

Because of these student loans -- and, in part, because lenders are being far more careful since the real estate market crashed during the last decade -- it's harder for millennials to get approved for mortgages. The same is true for car loans and credit cards.

Debt levels are lower now, but the debt has just shifted, and it's made it harder to buy homes and other consumer products because all of the money is paying for those pieces of paper.

Still, that does not mean there are no mortgage options out there, regardless of age. If you're considering buying a home, be sure that you know exactly how the legal process works, including things like how to estimate the value of the property, what binding clauses can be used in a purchase agreement, what happens with delinquent payments, and more.

Source: The Street, "Millennials Are Accruing Less Debt, Bypassing Homeownership," Ellen Chang, accessed Oct. 28, 2016

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