Tips for Today's Homeowner and Renters

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Every day Orion’s brokers work with individuals and families who are renting from a landlord, and who want to live in their own place. Whether it is not building wealth, or a landlord that keeps raising the rent, or a noisy neighbor on the other side of the wall, they are looking at options.

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What New Research Says About Renters’ Outlook

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New research from Experian® spotlights U.S. renters’ current sentiments around the prospect of homeownership and reveals nearly half (47 percent) believe they’ll be ready to purchase a home within the next four years. That figure jumps to 67 percent when looking over the next eight years. “Gen Zers and millennials appear to be the most optimistic about the prospects of homeownership, with 48 percent of Gen Z non-homeowners and 50 percent of millennial non-homeowners indicating they’ll be in a position to buy a home by 2029.” According to the research, most homeowners expect to achieve homeownership within a similar timeframe, reflecting common expectations and behaviors seen across this group.

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Credit Changes That Support Future Buyers

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Orion’s brokers closely watch changes in credit and underwriting. Consumers’ sentiment about the prospects of homeownership come at an interesting time for the mortgage industry, following the Federal Housing Finance Agency (FHFA) and Director Pulte’s recent approval of VantageScore® 4.0 for use in mortgage decisions. Only authorized credit scoring models and data sources, such as VantageScore® 4.0, are used in mortgage decisions to ensure compliance with industry standards. The more modern scoring model considers rental payments and other forms of alternative data, making it especially beneficial for renters pursuing homeownership who consistently pay their bills on time but may have limited credit histories. It is important that rental payments and credit data are reported correctly to ensure accurate mortgage qualification and to prevent issues during the approval process. This means that renters and future homeowners who have previously struggled to qualify for a mortgage due to limited credit history may now have improved access to homeownership opportunities.

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Common Barriers Renters Face When Pursuing Homeownership

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Orion offers home loans with very low down payments. According to the research, funds for a down payment (67 percent), home prices (66 percent) and low credit scores (51 percent) were cited as the biggest barriers to homeownership for current renters and nearly 40 percent rate their understanding of financial concepts tied to homeownership as “fair” or below. Brokers are here to help and provide advice. Potential buyers should determine how much they need to save for a down payment and other costs associated with buying a home, including insurance.

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Renters stated the following forms of support would be most useful on their homeownership journey: Financial support (61 percent), a clearer understanding of what I can qualify for (51 percent), and more financial knowledge about the mortgage process (38 percent). Renters should also check if they are eligible for certain homeownership programs or mortgage products, as eligibility requirements and rules for mortgage programs and homeownership can vary.

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Brokers know that renters who are thinking about homeownership can take proactive steps today to strengthen their financial profile and build confidence in the process. Those looking to expand their financial knowledge and improve their credit history are encouraged to sign up for a free membership at TransUnion, Experian, or Equifax. Enrolling in a free membership gives your client access to tools that can help them monitor their credit, set financial goals, and better understand their credit profile. There are many resources available to help renters prepare for homeownership, including guides, financial tools, and educational materials. Readers are also encouraged to join our newsletter or community group to access helpful tips, resources, and information about the home buying process. Your client can check their credit, receive personalized insights, and get alerts to help stay on top of their financial health and prepare for a mortgage. Future homeowners should evaluate their financial situation and credit profile before starting the buying process to ensure they are ready for the responsibilities of homeownership.

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The Value of Reporting Rent Payments

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Orion encourages brokers to tell potential buyers to get credit for their rent payments. If they consistently pay rent on time, they may be able to use that history to strengthen their credit profile. Renters should ask landlord or property manager to report their rent payments to the credit bureaus. For example, a renter who improves their credit score by making timely rent payments and saves for a down payment can transition to becoming a homeowner.

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Brokers encourage clients to build up their financial knowledge. Understanding how credit works is an important part of preparing for homeownership, and brokers are here to help with common credit questions and tips for improving your client’s financial health! Renters should also consider how much they currently spend on rent and compare that to potential mortgage payments to make informed decisions about their future.

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