Millennials are dipping into retirement savings to buy their first homes

Millennial home buyers are going to some troubling lengths to foot the bill for their first homes, according to a new survey.
Millennials are more likely than their older counterparts to fund their down payment and closing costs by dipping into retirement savings (13%, versus 8% of Generation Xers and 7% of baby boomers), saving money by moving in with family or friends (14%, versus 5% of Gen Xers and 2% of boomers) or selling personal items (12%, versus 5% of Gen Xers and 2% of boomers), a recent Bankrate survey of 2,582 U.S. adults found.
Their most common funding sources for home-buying costs included saving their own money (53%, versus 47% of Gen Xers and 45% of boomers), receiving a gift from family or friends (33%, versus 23% of Gen Xers and 14% of boomers) and using a down-payment assistance program (33%, versus 27% of Gen Xers and 15% of boomers).
“[Millennials are] having to be very creative and diversify the ways that they’re coming up with their down-payment and closing-cost money,” Bankrate mortgage analyst Deborah Kearns told MarketWatch. “They’re trying to exhaust all their options, and they’re certainly doing that at higher levels than the other generations.”
Some financial experts urge would-be homebuyers to prioritize saving for retirement over saving for a home down payment. But others suggest it’s fine for cash-strapped individuals to place greater emphasis on home buying temporarily, as long as they redirect savings to retirement after meeting their house-savings goal.
It’s possible that millennials, who are now aged 23 to 38, feel that “time is on their side” when it comes to drawing from retirement savings, Kearns said, and are more likely than their older counterparts to feel they can make up the difference over time. And the older a person gets, the less likely he or she is to have parents in a position to help out financially, she said.

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