A New Wave of Homebuyers

The landscape of America is shifting, and with this change, comes a new wave of homebuyers who are entering the housing market that are expected to be primary players. They’ve already started emerging and making their presence known but are going to do so in an even more significant way over the coming years. This impending wave of homebuyers will predominantly stem from two key demographics: underserved markets and Millennials. Over the past several years as America has become increasingly diverse, minorities have become the majority in many areas of the country. In fact, by 2043, it’s projected that America will be a minority-majority nation. Alongside this transition, another key cohort is rapidly rising – the Millennial generation. This massive age group is not only the largest living generation with more than 83 million individuals between 20 and 36, but they also account for more than 1/4 of the nation’s population. With this considerable surge of minorities and Millennials on the horizon, a transition is simultaneously taking place in the housing industry. The dynamics are changing. What used to be a market heavily dominated by an older, less diverse population, is evolving into a housing market that’s filled with a younger, diverse consumer. This demographic shift offers new business opportunities for mortgage lenders, at least for those lenders who understand the trends and are prepared for them. To effectively engage with each of these consumer groups requires a different approach. With minorities it’s necessary to have mirrors in the market; yet when it comes to Millennials it begins with having an ability to provide instant access to information. The key is having the right strategy in place if you’re going to gear your business toward the future.

Mirrors in the Market

In the coming decade, Latinos are expected to be a significant part of the rapid growth amongst minority households. The Urban Institute anticipates that more than half of all new homeowners will be Latinos, with blacks and other races accounting for another 40 percent. As this influx of minorities enters the housing arena, it’s essential that mortgage companies have a workforce that looks like and accurately reflects these communities, if lenders want to capture this swiftly expanding market.

A multicultural loan team gives a mortgage company a competitive advantage in an increasingly diverse marketplace. Lenders can more effectively attract minority consumers when they employ mortgage professionals who are diverse and are culturally aware, which means they know how to connect with and know how to best serve the distinct needs of underserved communities.

As first-time homeowners, many minorities will need workshops or educational resources that prepare them for the buying process; according to Pew Research limited credit or a high debt-to-income ratio has at times held underserved markets back from homeownership. Therefore, Loan Officers have to understand their financial background and be ready to equip them with tools to overcome any hurdles to homeownership. Each minority group has a different way of handling money and transacting business, which is often influenced by their culture, but if you don’t have a loan team who can relate to these cultural nuances, it will be difficult to serve this housing consumer, especially Latinos.

Since many speak Spanish, being culturally in tune with this group also requires removing language barriers by employing bilingual Loan Officers. When you have originators who are not only young and diverse but speak the language fluently, it’s a game changer. That’s because when you’re doing business with Latino borrowers, you’re typically working with more than one consumer. A second and third generation are often involved when they’re buying a home, which means the loan process becomes a multigenerational transaction. As a result, when a Loan Officer is able to connect culturally, it opens the door to build trust with an entire family. Once trust is earned, it can lead to establishing multiple long-term customer relationships as a credible lender.

Service Providers Reviews

Today’s consumer makes decisions heavily influenced by the experiences of other customers. That’s why building good customer relations is essential. Satisfied homebuyers share their experiences with other family and friends, and with their online community, as do unsatisfied consumers. According to Adweek, 93% of Millennials turn to these consumer reviews before making a purchase decision and more than 70% of them trust what they read.  Since Millennials care about online reviews, so should lenders if they expect to tap into this growing population of homebuyers.

Millennials want to research their prospective Loan Officer and mortgage lender before doing business with them. That’s why lenders have to invest in establishing an online reputation not only for their company but for their originators as well. When Loan Originators don’t have a solid online brand, they won’t remain competitive in a vast mortgage field. Reviews have to be readily available in the places where borrowers are looking, from your company website to social media pages and third-party platforms.

Dominating search engine results and generating positive reviews begins with how you close your customers’ loan. When you provide excellent service, customers are more inclined to write a favorable review when you seek their feedback. To continue producing a steady stream of user-generated content, you have to initiate contact with customers every time you fund a loan and make it as easy as possible for them to share their experience; in conjunction with this, you have to have a solid process in place to handle any negative reviews. The key is to build a reputable brand over a period of time so you’re able to eventually convert your Millennials into loyal customers.

Instant Access to Information

More than any other generation, Millennials utilize the internet and mobile devices when connecting with businesses. They’ve grown up in a digital world and have grown accustomed to having instant access to information; therefore, it shouldn’t come as a surprise that this push-button generation wants to work with mortgage companies that are fast with updates, create transparency throughout the lending process, and efficiently close loans. If lenders are going to meet the demands of this generation, it’s vital that they develop intuitive technology such as a user-friendly mobile website and easy-to-use apps that enable Loan Officers to quickly pass along information. This sort of mobility is a necessity for mortgage professionals in the 21st century.

As more consumers start the home buying process online, originators need be able to conduct business on the go. Whether that’s running a credit check, sending a prequalification letter, or providing a loan update, originators need mobile technology that allows them to deliver real-time information to both Real Estate Agent partners and borrowers. Millennials are looking for the type of convenience that allows them to use their handheld device to see what’s happening with their loan, anytime, anywhere. They will choose to work with lenders who can quickly deliver this and are highly responsive. As time progresses, it will be more important than ever for lenders to continue advancing their technology so mortgage professionals are equipped with the ability to be just as effective in the field, as in the office. Loan Officers who can’t provide instant access will be at a disadvantage in this competitive digital world.

Value-Added Service

Millennials are eager for information. They’re the most educated generation and as they step into homeownership, it will also be their first-time purchase so they will want to consume information that enables them to make a well informed decision. An impersonal sales ad that lacks substance isn’t an effective way to reach them; instead, they want value-added service, quality content like blogs that offer lending tips or videos that cover the basics of the mortgage process. They want to work with mortgage professionals who can equip them with information that adds value throughout the loan process like property details, attributes of a neighborhood, and insight on the school district. Attracting the Millennial consumer means not only delivering this useful information but making it highly personalized to their search. When you can accomplish this, Millennials will not only value you as a resource, but as their go-to Loan Officer as well.

Preparing for the Future

The key to having your business ready for this new wave of homebuyers begins with taking action now. Tomorrow’s success depends on today’s preparation. Lenders who want to serve future customers have to actively prepare because it takes time to implement and execute successful business strategies. Even though it can be challenging to make changes and requires tremendous work to remain progressive with the latest mortgage trends, success in the industry rides on it.