Thanks to an unprecedented surge from millennials, a monthly sentiment index from Fannie Mae rose to the highest level since 2011, when the survey began. “Millennials showed especially strong increases in job confidence and income gains, a necessary precursor for increased housing demand from first-time homebuyers,” said Doug Duncan, senior vice president and chief economist at Fannie Mae, when speaking to CNBC this month.
And yet despite the current sunny prospects, many millennials are still forced to rent according to Fannie Mae research. “Continued slow supply growth implies continued strong price appreciation and affordability constraints facing millennials and first-time buyers in many markets,” Duncan added.
So why are some millennials still feeling skittish about the housing market, when in truth it’s beginning to look a lot like spring for first-time homebuyers?
The answer is simple: less-than-perfect credit scores and debt. Mortgage originators must address these concerns for their millennial clients or risk losing potential borrowers to unfounded fears.
Sorting Fact from Fiction for First-Time Homebuyers
Fact: Barriers to homeownership are not as high as many millennials perceive them to be. The first step to owning a home is knowing how to finance it. Utilizing sophisticated loan-pricing engines, potential millennial borrowers can painlessly enter their desired terms and receive best execution pricing in less time than it takes to pick up the phone and dial an 800 number. Millennials, more than any other demographic, are empowered by being able to sleuth out their own mortgage information, rates, and resources using online engines and mortgage calculators. The first step to approaching the millennial mortgage market is to offer expert online options and resources like lead management tools and Mortgage Client Relationship Managers, or CRMs (view a LoanTek example here).
Fiction: Credit standards are historically tight; a personal credit score lower than 750 can take you out of the home financing game.