Lennar to millennials: Buy a home from us, we’ll help you with your student debt
As much as 3% of the purchase price of a home, or up to $13k, can go toward student loans
Lennar Corp. is trying to court millennials into homeownership with the promise of allowing them to buy a home while ridding themselves of some student loan debt.
Miami-based Lennar’s Eagle Home Mortgage will help pay a buyer’s student loans, contributing as much as 3 percent of the purchase price of a home, or up to $13,000, according to the Wall Street Journal. Eagle said it would do this without increasing the purchase price of the home or adding to the balance of the loan.
Millennials have typically shied away from homeownership compared to other generations.
One in four millennials say they have had to delay buying a home because of student debt, according to NeighborWorks America, a nonprofit that helps promote access to homeownership, the Journal reported. Half of millennials say they worry about their student loans all or most of the time.
Some housing experts say they expect Lennar to set a precedent and increase the number of first-time buyers, while others say the deal is too good to be true. Similar programs offering incentives were known drive up the price of new homes, instead of making them more affordable, according to the Journal.
Mortgage giant Fannie Mae will be backing the loans. It’s also backing loans with down payment assistance from Loftium, a Seattle-based company that will pay for up to $50,000 of the buyers’ down payment if the buyer agrees to continuously rent out a room in their home on Airbnb for one to three years.
Jonathan Lawless, vice president of customer solutions at Fannie Mae, told the Journal that efforts to make credit more accessible to millennials could end up deepening the shortage of homes if Fannie Mae and others can’t find ways to create incentives to build more homes. “As we pivot to next year, I think the thing that the industry needs to be careful about is we can’t increase access and demand without increasing supply,” he said. [WSJ] — Amanda Rabines