Millennials: Don’t Let Mid-range Fico Scores Prevent You From Buying a Home
Millennials are in tough place these days when it comes to taking that next step toward ‘adult responsibilities.’ The job market is ultra-competitive, and wages seem less and less to be keeping up with the cost of living in desirable regions such as Southern California, which can easily result in a certain amount of debt to simply keep up with the racing pace of life. A recent article written by the Wharton School of Business at the University of Pennsylvania showed that many Millennials had no plans to purchase a home simply because they didn’t think they’d qualify for a mortgage, for one reason or another. In many instances their fear of not qualifying for a mortgage was highly due to their FICO score falling within a medium range.
According to our friends at Keeping Matters Current, a recent survey revealed that two-thirds of the Millennials reviewed thought they needed a really high credit score in order to qualify for a home mortgage in the current real estate market — forty-five percent of these individuals believed that a “good credit score” was at least 780 or higher. This mind-set has kept them from thinking it’s even possible to own a home in the near future, so they’ve simply given up and found complacency with continuing to rent.
Here’s the reality… mortgage leader, Ellie Mae, has reported that the FICO score on many recently closed loans has been substantially lower over the past few months, and believe it or not, that bar is continuing to drop! Scores have recently lowered to the 720 range. Take a look at this graph (with data from Ellie Mae) that showcased the dramatic decrease we’ve seen over the past year:
This opens the door to many more hopeful buyers who thought their FICO score might hinder their chances of buying a home, Millennials included. Bottom line, if you’re in the Millennial category and had given up on the idea of purchasing a home due to a medium range FICO score, we urge you to rethink and do some active research to consider your potential options. Schedule a meeting with a reputable real estate agent in your area, and or mortgage professional, to explore what’s possible. You might be pleasantly surprised. Who knows, you could be a happy home owner come 2016!
For more of our perspective on this subject read our recent blog, “Infographic: How Loved Ones Influence Home Buying Decisions.”
Thinking of buying or selling a home in the La Jolla area? As consistent top producers in real estate, Linda Daniels and The Daniels Group are your La Jolla housing specialists. Working with The Daniels Group will give you with the advantage of having local experts to ensure that you have a successful real estate transaction. From buying, selling and investing to financing options and more, we have the expertise and resources to help you achieve your goals. Call us today at (858) 361-5561 or email us anytime by clicking here.