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What Are Typical Difficulties First Time Home Buyers Face?
Posted on: March 19, 2015 by Newmark Insurance
One of the most important factors of working in the real estate industry is gaining the trust of your customers; individuals who are facing one of the biggest financial decisions in their lives. Buying a home for the first time can be an intimidating process, especially for a consumer who is not familiar with common real estate and mortgage terms.
The amount of paperwork needed to close a mortgage loan can be overwhelming. As a mortgage broker or lender, it’s your duty to advise your consumer as best you can so they make a decision that’s right for them. It’s also imperative to be financially covered with the right Mortgage Broker E&O policy should make a mistake; unintentional as it may be.
One of the biggest mistakes that first time home buyers make is not asking the right questions and not knowing what questions to ask to determine what type of home loan and mortgage interest rate is right for their situation. Many times, it is up to the mortgage lender to inform their client of the differences between loans; for example a 15-year mortgage with a fixed interest rate of 3.75% versus a 30-year mortgage with a 4.25% interest rate.
Consumer reports recommend that consumers be educated on interest rates as well as the types of loans available, closing costs, and other possible fees. However, as educated, or naïve, as they may be about the home-buying process, your advice should be given cautiously to avoid opening yourself up to legal risks.
One of the biggest challenges faced by first-time home-buyers is coming up with enough cash for a down payment on a house. This is not the only difficulty they face though; other typical difficulties include building or maintaining a decent credit score, and having an unsteady employment history. In this day and age, millennial home-buyers are the same generation that has taken to “job-hopping,” which is a sign of a strong economy, however not a sign of a stable income.
Many first-timers are young professionals who may very well be still building their careers, and thus still building their credit and paying off student loans and/or car loans. As a mortgage broker or lender, it is your responsibility to advise these first-time homebuyers as best you can. Sometimes that may mean encouraging them to wait until they’ve established better credit and employment history; if possible.
At NewMark Insurance Services, we understand the Professional Liability Risks faced by Mortgage Brokers and Lenders, as well as other professionals in the real estate industry. We also write all other liability products needed to operate your business. For more information, please contact us today at 855-777-6549.