Buyers are doing everything from tapping into their retirement savings accounts to taking financial gifts from family and friends in order to bring more money to the closing table. Bankrate.com recently surveyed more than 2,500 adults about their home purchase to find the top ways they’re saving.
About 47% of first-time home buyers said they saved on their own to purchase a house. But others also sought help elsewhere, such as through a first-time home buyer grant or loan assistance program (21%), financial gifts from family or friends (21%), or by taking out money from their retirement savings (8.8%), the survey showed. Other less common efforts cited included getting an additional source of income (7.4%); receiving a loan from family or friends (6.3%); moving in with family or friends to cut down expenses (5.7%); and selling personal items like jewelry, cars, and electronics (4.9%).
Millennials are more likely than Generation Xers to say that they’ve used their retirement savings or sold personal belongings in order to find more money for buying a home, the survey showed.
“It’s troubling that people feel like they have to tap into their retirement savings,” Deborah Kearns, a mortgage analyst with Bankrate, told CNBC. “They’re already not saving enough for retirement, and they’re compounding the problem by taking out a loan or not contributing to save for a down payment.”
More importantly, what percent of first time home buyers, and Millennial’s or Generations Xers have any clue what the costs of retirement will take to live on a minimal retirement income? So many are living for the moment, trying to accomplish more of their bucket list and believe they will never retire.
May I suggest to you, put in play a fictitious model of your lifestyle and play it out for just a month. Where do you stand now? The federal government may not have a Social Security program in 50 years! It’s so simple to put away just 5% of your earnings a week and put it in your own IRA or similar.