First time home buyers are not the same as years gone by. They generally play the same role, but their primary characteristics have evolved. By understanding these characteristics, we can better recognize what drives their decisions and be more prepared to connect with them to meet their unique needs.
Delaying their home purchase — In the early 1980s, the median age for a first time home buyer was 29.6. Now, it’s 32.5. It’s assumed that buyers are working to pay off their student loan debt before buying a home. They are then able to save more and afford a better home in a nicer neighborhood later on. They may also wait until they have an established career and a more reliable income, making them less of a risk for larger loans.
Renting Longer — Today’s first time home buyers have been renting longer, approximately six years total, before purchasing a home. As a result, they may not know the extra costs that exist in owning a home. Be sure to help them understand how the loan repayment process works and of any and all additional costs.
Buying on their own — Fewer people are getting married lately, or they are waiting longer to do so. First time home buyers who fall into this category are less likely to co-borrow and typically take out smaller loans to purchase smaller houses.
Experiencing less wage growth — A first time home buyer has probably had a flat income the past few years while home values have increased. This makes buyers more likely to wait to find the home they want at a price they can better afford.
Buying more expensive homes — Fist time home buyers were once known for buying “starter” homes—typically older homes with only one or two bedrooms. However, in recent years they have been purchasing more expensive homes. This may be due to fluctuating inventory, saving more money for down payment, or changing lender standards. Regardless of the reason why, you can help these clients by exploring products that accommodate larger loan amounts.
The factors and characteristics that drive today’s first time home buyer also affect their borrowing needs. Here at Homestead Funding Corp., we are able to adapt to these needs in order to understand and respond to each client’s thought process to create the relationship necessary for a positive mortgage experience. ecessary for a positive mortgage experience.