Selling Millennials Their First Home
Believe it or not, in this day and age, millennials are procrastinators when it comes to buying a home. Generations before this were buying their homes at an earlier age. 37 is the median age now that people are buying their first home. In order to reach this special group of buyers, real estate agents need to understand and recognize the needs of today’s first time buyers.
Lenders today are looking for customers with a 760 or higher credit score to get the best rates. 720 used to be considered an excellent score, but that is no longer the case. Your client may have had an easy time being accepted to rent an apartment with their credit, but obtaining a loan is much more difficult. It’s important that your client understands that, and you can give them these ideas to get that stellar score.
Increase credit limits: This may seem like something that would be negative towards your credit, but the key here is to increase your limit, but not use it. Your credit limit should be anywhere from 25%-35% of your annual gross income. The key here is to not max out your limit, but to show that you are responsible with credit.
Pay down revolving lines: You want to be sure that your revolving lines of credit have a balance of below 50% of the credit limit. When you maximize your credit limits, that adversely affects your credit score.
A lot of potential first time home buyers might be dragging their feet because of the thought of a down payment. A large sum of money can seem daunting to someone who doesn’t understand what they will need to close a loan. Informing your client of what is possible as far as down payments go, will help ease their mind and make the dream of home ownership a reality. Most lenders want 10% for a down payment. You can help prepare the first time home buyer by being upfront with this information.
While working with a millennial that wants to buy their first home, giving them the knowledge they need before beginning to look for homes will build trust and lead to you closing on their first home.