Millennials represent a huge population of potential homebuyers, however they continue to put off the decision to buy a home, choosing to rent instead.
Mortgage lenders continually try to reach this generation, but seemingly to no avail.
As it is right now, many prefer to live in downtown urban areas paying rent that they know is way too high, rather than buy a home.
So where are lenders going wrong? It's really two fold.
For one, we aren't easily lumped together. In fact, when non-Millennials do this, it really gets under our skin.
Two, there is a misstep in communication, and that's when the latter does the former.
Prime example: One lender sent out a press release that perfectly illustrates the vast differences between mortgages lenders and Millennials.
In this release, Matt Weaver, vice president of Finance of America Mortgage, a Blackstone company, talks about seven myths about Millennials that need debunking.
The problem is it actually shows that he does not know Millennials well enough to be able to debunk myths about us (Sorry in advance, Matt).
Here are those examples:
Myth #1: Millennials don’t have enough money
“Buying a home today is like shopping the Bluelight special at Kmart,” Weaver wrote. “Interest rates are so low a half a percent discount increases your buying power and today your money can afford you a $315K home for $300K.”
While he’s right about lower interest rates giving more buying power, is he really speaking about Millennials?
Forget affordability, my response to his statement is what on earth is a Bluelight special? And do Kmarts still exist?
Wake me when Google starts offering mortgages.
But seriously, if you want this generation’s business so badly, couldn’t you put a little more effort into it? We prefer rebates to discounts, by the way.
A google search of "Where do Millennials shop" brought me to that link. Spoiler: Nothing in there about Millennials showing love for rapidly declining brands.
Let's skip ahead a few points, there is much burn left in me.
Myth #6: Online preapproval applications save time
“The lending world is leveraging technology in a way that doesn’t work for the consumer,” Weaver wrote. “Applying online is solely for the benefit of the lender and doesn’t help the consumer. In fact, it’s a huge waste of time and not necessary.”
What?
For the benefit of the lender? Lenders are not forcing consumers into the online market, consumers are forcing lenders, because it’s what we want.
Millennials are perfectly comfortable conducting our financial affairs in a 100% digital environment. What’s more, Millennials expect more from lenders when it comes to technology.
Millennials, like it or not, live on technology. In fact, we don’t even do grocery shopping without it. I order my groceries online and swing by after work to pick them up on the way home. We have become so intertwined with technology, that it shocks us when someone doesn’t have it. If you can’t give us what we want online, we’ll go somewhere else, because someone else can.
Lending document provider DocMagic announced the formal launch of its new total eClosing solution, claiming it will electronically transform the entire mortgage process from initial eDisclosure, to final eClosing through investor eDelivery.
Back in 2015, the Consumer Financial Protection Bureau finished its study on the benefits of electronic closings that it started back in April 2014, and it concluded that borrowers can in fact benefit from electronic closings as part of the mortgage loan process.
If you aren’t ready to give us want we want, don’t expect us to give you our business, or our time.
The good news is, Weaver is more on the right than he is on the wrong side with his email.
The bad news, that isn't good enough for Millennials.
In fact, Millennials don't care if you want to be our friend. You don't have to understand us, just give us want we want. If you can do that, we'll help you out, like I'm about to do for Weaver. His email was not without its good points, and he did point out other myths that Millennials, and all homebuyers should pay attention to.
He gets better with the other 5 points, which are here:
Myth #2: It’s cheaper to rent than own
This is becoming more true as affordability problems increase.
Despite the high price tag, the cost of buying a home still beats the cost of renting after less than five years in New York City, a new report from StreetEasy found.
Myth #3: Lending requirements are tight.
“You should consider your financial situation, but realize that the requirements to buy a home may not be as tight as you think they are,” Weaver wrote. “FHA financing caters to first time homebuyers. Do your research by meeting with a lending professional before you even look for a home to find out what financing options are best for first time home-buyers."
Myth #4: Talk to a lender after you choose a home.
“Where everyone fails, they meet with a Real Estate agent first,” Weaver writes. “Do the opposite first. Speak to the lender to get a mortgage check-up, give them all your documents and if you don’t fit in the box find out what you need to do to qualify in 12 months.”
The highest FICO score is 850, and although mortgages are available even to those with FICO scores in the lower 600s, the best mortgage rates go to those with scores of at least 760 or higher. It is important to know your score before you apply in case you need to make improvements to your credit.
Myth #5: If you don’t qualify today it will mark you for the future.
"First time homebuyers have an illusion that if they don’t qualify during the first round they will have a mark on them for the future,” Weaver wrote. “Meeting with a mortgage professional early on saves you a lot of trouble in the future.”
“It prepares you to get your books in order for the future and understand what will best suit your needs,” he continued “Anyone who is thinking of buying or selling a home should consult a mortgage person well in advance."
Myth #7: You need to have a 20% down payment.
There are, in fact, many other options available, even without going through an FHA loan.
In fact, homebuyers can get a 3% down mortgage through JPMorgan Chase, through Wells Fargo, through Bank of America and through United Wholesale Mortgage, among others.
Homebuyers can get a 1% down mortgage in Long Island through The Community Development Corporation of Long Island’s partnership with the Housing Development Fund, through Quicken Loans and through Guaranteed Rate.
In fact, buyers can even get a mortgage for zero down through Fifth Third Mortgage and through BancorpSouth.
There are options outside of 20% down.
So his article did have some good points, however he is missing key communication Millennials, and, without technology, is not providing what this generation really wants.
Unless he, and other lenders, can't take the time to give Millennials what they want, he could miss out on gaining the business of the largest generation of homebuyers, ever.
