Key Highlights
- A mortgage is a ticket to homeownership.
- Increase you Millennial clients’ chances of qualifying for and getting a favorable mortgage rate with these tips.
Obstacles to getting a mortgage loan approval at a favorable rate are many for your Millennial clients. The scarcity of starter-homes, homes that are most doable for Millennial buyers, and student loan debt are just two of those obstacles.
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That being said, here are five tips you might offer your Millennial clients that could help them qualify for a favorable mortgage rate.
- Suggest they get rid of “unhealthy” debt prior to applying for a mortgage loan.
- In terms of credit card debt, the lower the existing monthly debt payments are, the better. Lenders look carefully at the debt-to-income ratio of all mortgage applicants.
- The less your Millennial client owes, the more this ratio drops and the better for your client.
- If you client is paying off some revolving credit card debt, he/she could lower his/her credit utilization of the amount of her/his available credit…this would most definitely improve your client’s credit score.
- In terms of student loan debt, if your client cannot pay off the entire student loan debt, chances are your client could pay off some or all of her/his credit card debt.
- Also, suggest to your client that she/he does NOT make a big credit card purchase when applying for a mortgage and does NOT apply for additional credit cards during the mortgage qualification process.
- Suggest they get their credit score into as good shape as possible – credit scores are the most important element (35% of total factors) of determining who gets a loan and at what rate
- The higher your client’s credit score, the higher your client’s chances of getting approved to borrow money for “their” house.
- The best way to improve/increase your client’s credit score is to pay her/his bills on time. A positive payment history speaks volumes.
- Suggest your client corrects any errors on his/her credit report. The all of the big three credit agencies, Experian, Equifax and Trans Union, offer people a free copy of their credit report every year so it’s easy to see whether or not everything is correct in that report.
- Suggest that your client have a steady source of income.
- If your client works in the gig economy, your client can provide lenders with copies of the past four years of his/her tax returns as a way to verify his/her ability to handle monthly mortgage payments.
- Suggest that your client create and maintain a savings account.
- Suggest that your client aim for a 20% down payment to both increase her/his chances of getting approved for a loan and to avoid having to pay for private mortgage insurance (required for all borrowers who put down less than 20%.)
- Saving money is difficult, as everyone knows, but the usual way to do it is by spending less and/or getting a side job.
- Suggest that your client “go shopping” for the best available mortgage.
- Just as you and your clients shop around for the best deals, best prices and best terms for most everything purchased, do the same…shop around for the best mortgage deal, price and terms.
- If your client has a good credit score, a solid income, little debt and a good amount of savings, your client will be in good shape.
Thanks to HousingWire for source material.
Also read: Will Zillow and Opendoor Take It All?, Podcast: Why Do Most Real Estate Teams Fail? | Don Yoakum Interview, All Home Buyers are Becoming Older
