Helping Young People Get A Mortgage In Their Twenties
I don’t know about you, but I remember when the people around me started getting mortgages for flats and family houses (some of them, at least), and I remember how difficult it all seemed. I was focused on growing my career, and I was doing well. Still, the thought of buying a home was a little … maybe not quite overwhelming, but at least daunting. And heck, I’d been educated in finance! Do you remember those times? Now just imagine the struggle that people with different educational and interest backgrounds are going through when they start thinking about getting a home of their own. For these reasons particularly, some don’t even consider moving out of their parent’s house. “It’s nonsense,” they think, “there’s no way I can get a mortgage now.”
Then a big life event comes, such as a major job offer or surprise pregnancy, and there’s no way around it. It’s time to get on their own feet.
This is when you, as the well-informed and trustworthy LO, come in. It’s not always all about money, as many soon-to-be-homeowners or even loan officers think. Let’s have a look at the other areas where your support and advice will be needed.
Student Loan Assessment
When we’re talking about young homebuyers, we’re basically talking about the extent of their student loan debt. Since it will inevitably play a major role in their credit score, it’s important to have a thorough look at how much they owe, how long until they pay it off, and whether they’ve been consistent in their payments.
A big misconception connected to student loans is that it’s good to get them paid off right away. But as with much credit, it’s not the size that matters, it’s how you handle it. “According to FICO, 7% of consumers with more than $50,000 in student loan debt had excellent scores of over 800 points. While balances on credit cards impact your credit score, this isn’t the case for installment loans. Instead, it’s the payments that matter.” — studentloanhero.com
It’s been said before, but I’ll say it again: help the first-time homebuyer see the life-changing scope of buying a new home. This is a big commitment, and they need to understand that. But don’t just stick to the cons. Share the pros as well: getting their hands on something that will be of lifelong value, climbing the first rung of the property ladder, having equity that can always be sold should the need arise, and above all, gaining a big chunk of control over their lives. No more roommates, no more living in a parent’s house, no more rent that doesn’t lead to any final value.
It took me some time to come to this realization, but once I did, my lending career changed for the better. First-time homebuyers are specific in many ways, and one of them is doubt. That’s why they seek a loan officer: to give them an estimation of their credit score, look at their chances and prospects, help them evaluate the pros and cons, and ultimately to give them the final push in the right direction. You’re the expert, and the power to push them in the right direction is in your hands. Use it well, but use it.