Hispennials, or Hispanic Millennials, view their finances differently than the majority of Millennials, according to a recent study by Wells Fargo.
One of the most notable differences is that Hispennials are more likely to provide support for extended family members, the survey shows. About 30% of Hispennials say they are currently providing financial support to two or more generations of their family, versus 14% of total Millennials.
This trend shows through even when it comes to buying a home. Hispennials are more likely than any other race or generation to use a gift to pay their down payment on a home, said Frank Fuentes, New American Funding vice president of multicultural community lending, in an interview with HousingWire.
Hispennials report a slightly lower income level of $31,100, compared to $33,800 reported by the general population. On the other hand, Hispennials report a significantly lower student debt amount at $10,267, compared to the median reported by general-population millennials of $19,978.
Hispennials are concentrating on their present-day finances at a higher rate than the general Millennial population: 66% of Hispanic millennials attest to having a monthly budget, versus 54% of the general population.
However, when it comes to saving for retirement, Hispanic millennials are doing so at a rate of 52%, versus the general population of 59%, the survey showed. That said, greater percentages of Hispanic millennials, 42%, consider saving for retirement a high priority, versus 35% of the general Millennial population
This spills over into home buying when Hispennials look to get their first home. While saving may be hard for Hispennials, there’s still hope. Fuentes outlines several options available to Hispanic Millennials.
In California specifically, many Hispennials take advantage of buyer assistance programs, Fuentes said.
In fact, although not every lender offers every program, there are actually many options available to first time buyers.
Here are some of the options Fuentes mentioned:
Loan assistance programs: In these programs buyers pay back the down payment later, usually when they sell or refinance the home, or in monthly payments.
Grant assistance programs: In these programs the buyer does not pay the down payment back, but takes a hit with a higher interest rate.
FHA loans: These government loans only require a 3.5% down payment, but the buyer will have a higher interest rate than a conventional loan.
Conventional 3% programs: Many lenders have begun offering Fannie Mae and Freddie Mac’s 3% down payment programs which allow first-time buyer to get a conventional loan with just 3% down.
Fuentes emphasizes to those who are hesitant to enter the market under these programs that the market today is vastly different than the market before the housing crisis. The main difference is seen in underwriting and stated income loans.
In fact, now, new homebuyers may even get frustrated with the heavy amount of paperwork involved in the process, Fuentes said.
Many Hispennials with good credit scores and solid proof of income but are still struggling to pay the down payment will use a financial gift from family members. Fortunately for them, it is not difficult to fill out paperwork for the gift, and only requires a gift letter and a bank statement from the giver demonstrating the ability to pay, Fuentes said.
Survey respondents included 1,005 general population Millennials ages 22 to 35. Participants needed to be employed, not in the financial services or banking industry, and a U.S. resident for at least three years. For comparison purposes, 504 Hispanic Millennials were also surveyed.