Last year saw an increase in high-credit borrowers; borrowers with FICO scores above 700. In fact, the average credit score for borrowers was at a record high of 755.
Compare this score with the average credit score in the U.S., which is 695, and it’s clear that many homebuyers are getting their credit in good shape before they borrow money for their home purchase.
As a real estate professional, this news offers opportunities with two specific types of client:
- Qualified but hesitant buyers who need help getting off the fence and into a home.
- Buyers whose credit needs improvement and are ready to start working on it.
Here are several tips to help you work with each type of buyer.
Buyers with great credit who are still on the fence
Your clients have been diligently focused on paying down student loans, car loans and their credit card bills, and as a result their credit rating is good. But they’re still hesitant to apply for a mortgage and put an offer on a home.
“What are they waiting for?” you might ask. Before you throw your hands in the air in frustration, try this:
- Great credit means great rates. If their credit score is above average, they may be able to take advantage of comparatively low rates.
- Explain the urgency. Interest rates are set to increase this year. Acting now will help them lock into a low rate before they increase any more.
- Start to build equity. The sooner they buy, the sooner they’ll be able to build equity on their investment.
Buyers whose credit needs work
If you have clients who want to buy a home but their credit is holding them back, help them get on track. Although they don’t need perfect credit to lock into lower rates, it is important to tackle outstanding debt and take a good, hard look at their credit report.
- Connect them with a reputable mortgage lender. A mortgage lender can give them specific information about the loans that are available to them and may offer tips to help them get their credit on track.
- Provide valuable information about improving their credit scores or paying down debt. Not only will this help them take control of their credit, it also helps you stay in touch with them so when they’re ready to buy, you’ll be the first one they call.
- Keep in touch. They may not be ready right now, but with time and focus, they’ll be ready to buy a home. Staying in touch ensures that you’ll be the one they trust to help them through the process.
Buying a home is a major financial decision for most people. However, it’s a great opportunity to show off your expertise and character, whether your clients are qualified to buy now or will be ready further down the road.
Brian Buffini is the Chairman and Founder of Buffini & Company. You can follow Brian and Buffini & Company on Facebook.