Why Millennials Hoping to Buy a Home in the Future NEED to Establish Credit NOW

Why Millennials Hoping to 
Buy a Home in the Future 
NEED to Establish Credit NOW

      Here are 2 statistics I ran across recently:

     As a Chicago-area Mortgage Originator, I can tell you ... those two statistics just can't co-exist in today's Mortgage Lending environment and when you're hoping to finance the purchase of a home.  No, in today's Mortgage world Buyers need to have established Credit and have let it "mature" in order to get more credit to buy a home.  

     Thinking of applying for a Mortgage, but don't have established Credit?  It won't matter if you've paid your bills on time and have a good Down Payment for a home.  Under current financing guidelines, you'll find Lenders turn you down for "insufficient credit history". 

     Now, don't misunderstand me. I get why Millennials are wary of Credit in general ... and Credit Cards, specifically.  

     But they must be aware:  Credit ... and ultimately Credit Scores, influence a growing number of things in our lives. Insurance coverage, cell phones, cell phone service, utilities, rent, etc. ... even certain employments, now rest upon them.

     So it's vitally important to understand these 2 facts if you're a Millennial hoping to buy a home in the future:  

     Underwriters and Mortgage Lenders will ask that you:
  • Provide concrete evidence proving that you have the current ability to make payments on the Mortgage for which you are applying. 
  • Provide proof in the form of a Credit Report that you have a "documentable history" of honoring your credit obligations. 

     In other words, they'll want a significant credit "story line"  to follow during the Underwriting Process.  (Click here for a Checklist of info/documents typically needed at the time of Mortgage Application.)

     If current Mortgage Underwriting rules and regulations regarding Credit and Credit Histories remain in place, Millennials hoping to buy a home will have to overcome their fears and embrace Credit.  At least to some extent.  

     And they'll have to do it far enough in advance of when they hope to buy their home so that their Credit History is lengthy enough and Credit Scores high enough to satisfy Mortgage Underwriting scrutiny.

     So ... just what is the time frame that Millennials should be concerned with for establishing this important Credit?  How much time is "enough" time in the eyes of Mortgage Lenders?  (For info on how to establish needed Credit, please read my post, "Credit:  Who Needs It? Credit:  Who Needs It?  Why is it Important?  How do you Establish it?")

     Here are the rules (as of this writing, October, 2014) regarding the needed maturation of Credit and Credit History:  

  • A minimum of 2, sometimes 3, OPEN credit lines (Revolving, Student Loans, Installments) are required for an Approval ... not to mention building a Credit Score (FICO).
  • These accounts should be OPEN (not closed) for a period of at least 12 months with an on-time payment history.
     Note:  Management of debt is a critical part in the Credit Scoring process.  Keep accounts open!  

     Maintain balances WELL BELOW the Maximum Credit Limit.  (30% is optimum.  50% maximum, including finance charges.  Contact me for further info.)  And make all payments on time.

     For those Millennials hoping to buy a home in the Chicago-area in the near future ... and in need of info or guidance in establishing Credit, contact me.  We'll get started on developing a plan that fits your personal financial scenario and time frame for buying a home. 


*  Looking to buy or refinance a home in a Lincoln-Way CommunityWill County or elsewhere in Chicagoland or WisconsinContact Me today!  I'll put my 37 years of Mortgage experience and expertise hard to work on your behalf.
     I can be easily found at:
Direct:  815.524.2280
Cell/Text:  708.921.6331
eFax:  1.815.524.2281

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Gene Mundt, Mortgage Originator, an Originator with 37 years of mortgage experience, will offer you exemplary mortgage service and advice when seeking:  
Conventional, FHA, VA, Jumbo, USDA, and Portfolio Loans 
in Chicago and the greater Chicagoland region, including:  
The Lincoln-Way Area, Will County, (New Lenox, Frankfort, Mokena, Manhattan, Joliet, Shorewood, Crest Hill, 
Plainfield, Bolingbrook, Romeoville, Naperville, etc.), 
DuPage County, the City of Chicago, Cook County, 
and elsewhere within IL & WI

Your Referrals are Greatly Appreciated!




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