Making the transition from renting to becoming a full-fledged home owner for the first time is both exhilarating and terrifying. Though the current market is pricing some potential first-time buyers out, the fact is the sheer number of new owners will only continue to grow over time as Millennials and their younger counterparts forge forward in their lives and careers.
Naturally, many of us will meet the same fears and challenges from these clients over and over again. This is why it’s essential to understand not only what these concerns are, but how to address them properly with empathy and facts. Here are four of the most common first-time home buyer fears – and how to address them:
1. “I Can’t Afford A House Right Now”
What You’ll Say: If you are already paying rent, you can generally afford to buy. The tax savings on mortgage interest alone can come back at the end of the year to make up the difference between your current rent and potential mortgage payments.
Plus, with a strong enough credit score, you may actually be able to afford more than you realize. Remember: The scores used for mortgage lending take on a much larger picture of your overall credit.
Finally, while there’s a higher initial cost to buying a home, staying in one place for a few years can build equity which can result in a financial boon.
2. “I’m Going To Wait For The Market To Change”
What You’ll Say: Waiting for the perfect time seldom works to your advantage. Even the people who lived through the Great Recession benefited from an immediately following era of financial growth. In fact, the United States entered the longest period of general prosperity since World War II. Even the biggest economic downturns are, well, normal. Though the COVID-19 unprecedented pandemic threatened to damper the economy, the housing market still continues to thrive. Get in when you can, rather than waiting for a time that may never come – and possibly make the change even tougher.
3. “I Don’t Have Enough Saved For A Down Payment”
What You’ll Say: The 20% down payment requirement is seldom true in practice. Options that require much less than this number, as low as 5% or less, exist. Additionally, many states have down-payment assistance programs that can help.
Another popular idea gaining steam is house-hacking. This involves leasing out one of the home’s bedrooms or units. This rental income is then applied toward the mortgage.
4. “My Credit Score Sucks”
What You’ll Say: A poor credit score doesn’t necessarily mean speaking to a lender isn’t worthwhile. A good loan officer (or mortgage specialist) will be able to help resolve all manner of credit challenges, sometimes by helping to move or consolidate debts, or putting a plan together with a dedicated credit counselor.
Even for those with no credit history, there are several possible solutions to explore. Cosigners and lenders willing to look at alternative forms of history such as student loans and rent are a couple of options.
Buying a home is always a big experience – whether your clients have done it before or not. Being prepared to listen to their fears and expertly guide them toward reliable solutions will further establish you as a trusted source, and further fortify your local brand.