TheMReport — News and strategies for the evolving mortgage marketplace.
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28 | TH E M R EP O RT FEATURE According to a recent Houzz- Bank of America study, U.S. homeowners who leveraged secured financing to pay for renovations in 2017 were able to take on larger home improvement projects, with nearly three times the median spend of those who paid for renovations with cash-only ($32,000 versus $13,000). Of the available secured financing options, HELOCs are the most commonly used (47 percent), which was attributed to ease of use (39 percent) and low cost (38 percent). But not everyone is in a home of their own that they can make changes to, particularly renters or those looking to buy for the first time. Millennials & Gen Zers: Taking the First Step on the Property Ladder A s an emerging force in homebuying, millennials and Gen Zers are jumping into the housing market. The 2018 Homebuyer Insights Report (HBIR) found that 72 percent of millennials are prioritizing homeownership over other life goals, such as marriage (50 percent) and children (44 percent). Additionally, more than three- quarters of Gen Zers are willing to sacrifice running their own business in favor of owning their own home according to Dash Mortgage. Despite this, younger genera- tions can and should be cautious about the homebuying process, especially when thinking about the money they have, or more so don't have, saved for a down payment. To help reduce this anxiety, it is important to discuss their options and provide guidance to get them on the right track. There is a range of tools and resources available, such as down payment centers, which helps homebuyers search for down payment and closing cost assistance programs. For those who are having a tough time accumulating a down payment, there are affordable loan options that offer competitive fixed-rates and low-down payments. Others might have family that can provide help with a down payment. There are also options that enable parents with investments to pledge down payment funds for their child without liquidating their invest- ments (Merrill Lynch). When guiding first-time buyers in particular, it is important to look even more closely at their journey and how you can customize your support to enhance their experience. Beyond Generations: Single Women Leading the Way B eyond generational segments, a group that has been entering into ownership in increasing numbers is single women. The HBIR found single women are prioritizing homeownership more so than their male counterparts (73 percent vs. 65 percent). When thinking about how to support this group, of course tools and resources are vital for all first-time homebuyers, but it's also important to make them comfort- able with what can be a complex process, and maybe even more so when doing it alone. Let your client know that solo homeown- ers, male and female alike, are increasingly becoming the new norm. Not only do they have you as a partner and trusted guide in the process, but there are also ways to address concerns and demonstrate their buyer eligibili- ty—I'm talking prequalification and preapproval. When it comes to this topic, a back-to-basics overview can be helpful, especially in a competitive housing market. Check with your clients to make sure they know about ways to set themselves apart from other buyers. While cash, of course, is always king (and queen), there are other ways to separate from the pack if that isn't an option. Prequalification (an estimate of how much they can borrow) and preapproval (an approved loan amount) not only distinguish you from other buyers as a serious candidate, but they also streamline the process making it easier for all involved. With new mobile tools you can request prequalification and preapproval all from your mobile device. Remind your client that prequalification is a great first step to set expectations and learn approximately how much one can afford. Preapproval takes it a step further and requires more documentation, but it gives buyers an approved loan amount they can go shopping with. Refreshing people on the basics can allow them to shop for a home with confidence. The key is not letting unnecessary un- knowns stand in their way. So, when the next client comes your way, I hope you'll take a moment to consider exactly where they are in their homebuying trajectory and what guidance and resources are best for them. The ever-changing real estate market has increased buyer anxiety, and consumers are looking now more than ever to gain knowledge from experts to help them accomplish their goals. Make it your mission to help them have their best experience by tailoring your approach to fit their unique journey. AJ BARKLEY is the Neighborhood Lending Executive for Bank of America, responsible for identifying opportunities to drive successful homeownership among low-to moderate-income borrowers, under- served communities, and multicultural borrowers across the economic spectrum. In her role is, she is accountable for transforming the company's Community Reinvestment Act commitment for more mortgages, vehicle, and small business lending into a strategy designed to increase demand, market share and consumer education. She is also responsible for aligning strategies to deepen relationships with multicultural, first-time home buyers and low- to moderate-income consumers. Homebuyers now span several generations and genders: Generation Zers, millennials, Gen Xers and baby boomers, male and female, are all taking steps forward in their homeowner journeys. As industry professionals, it is essential to be in-tune with the uniquely diverse situations each group brings to the table—no matter the stage—it is essential to know how to best meet clients' needs and to understand that one size doesn't fit all.