MReport March 2017

TheMReport — News and strategies for the evolving mortgage marketplace.

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6 | TH E M R EP O RT TAKE 5 M // What percentage of today's homebuyer search for properties online? CROSS // Whether someone is a first-time or experienced homebuyer, it's very likely that a decent portion of their real estate journey will take place online. To put it in perspective, four in 10 homebuyers start house hunting with an online search, according to the National Association of Realtors. Additionally, a recent Bank of America survey found that more than three in five (61 percent) homebuyers plan to use a real estate app or website during their homebuying process. Virtual tools and mobile apps can make the homebuying and mortgage experience both easier and more enjoyable. This preference has caused the homebuying process to evolve, and lenders to adjust the way they do business by ensuring their mobile/ online tools are up-to-date and user- friendly. M // In what way have you seen the home buying process evolve due to mobile and online tools? CROSS // Mobile-optimized resources now provide information to help the purchase decision, like school data and walkability scores, to determine if a neighborhood will suit their lifestyle. In addition, e-mail alerts, calculators, expanded pricing data and financial education tools are often included within these tools, which can help buyers make more informed purchase decisions. In addition, real-time loan status information is transforming the mortgage process into something much more fluid and consumer- friendly. Mortgage applicants with certain lenders are now able to securely upload, submit, and sign documents, get real-time status updates on their application and loan, receive important documents and disclosures, and even communicate with experts via secure messaging. Additionally, home shoppers can learn a lot about mortgage options and a bank's customer service through website reviews of mortgage loan officers and lending institutions. M // In addition to the mortgage process advancements, how has the industry provided online resources for down payments? CROSS // Saving for a down payment can be one of the most challenging parts of buying a house. Fortunately, there are numerous down payment calculators online, some of which offer a searchable database of local and national assistance programs that may be able to help homebuyers save money on their down payment and up- front costs, as well as offer monthly payment assistance. We actually found that more than half of Gen X homebuyers and 46 percent of millennials and baby boomers use mortgage calculators during the home shopping process, in a recent Bank of America survey. M // How hot (or not hot) is social media in the home buying space, including home design apps? CROSS // Both social media and home design apps are frequently used among potential and current homebuyers. About 91 percent of Realtors use social media in their jobs, according to the National Association of Realtors. Decorating a home can be one of the most enjoyable aspects of homeownership, and many buyers turn to social media sites and apps like Pinterest for home décor inspiration. The Bank of America Homebuyer Insights Report found that 49 percent of millennials use Pinterest (vs. 32 percent of Gen Xers), 37 percent use Facebook (vs. 28 percent of Gen Xers), and 33 percent use Instagram (vs. 11 percent of Gen Xers) for home decorating ideas. On top of that, nearly two-thirds (65 percent) of homebuyers watch TV shows to get ideas for home designs, and about half of this amount turn to home design magazines (35 percent) or websites (32 percent) for inspiration. M // What trends will be prevalent in the mortgage industry this year? CROSS // As the oldest of the millennials hit their mid-thirties, many will begin their home search, and many Baby Boomers will look to move as they reach their retirement years. Newly-constructed homes will likely become more expensive with increasing materials costs and a smaller skilled labor force. Home prices on the already-expensive West Coast will likely continue to rise, while homebuyers may find the Midwest more affordable. The Federal Reserve recently raised interest rates for the second time in a decade and has indicated that three more increases to its benchmark rate are coming in 2017. Overall, the rate increase reflects the Fed officials' confidence in the strengthening of the U.S. economy, but by the same token, prospective homebuyers are concerned about the impact of higher borrowing costs. There's a natural concern among consumers about higher interest rates, particularly those looking to buy a home soon, but it's also important to keep perspective–many previous generations of homebuyers purchased homes at significantly higher interest rates than what we enjoy today. Furthermore, there are more options today to assess one's overall financial situation and help with financial obstacles, such as down payment assistance programs and low down payment loans. From Keyboard to Closing Table—How Homebuyers are Utilizing Technology John Cross is Division Sales Executive at Bank of America. Prior to his time at the Bank, Cross spent 15 years leading the sales and service operations at PepsiCo Inc., one of the world's leading food and beverage companies. Cross recently spoke with MReport about the upward trend of technology in the homebuying process, and how many hopeful homeowners begin their journey online. "We actually found that more than half of Gen X homebuyers and 46 percent of millennials and baby boomers use mortgage calculators during the home shopping process."

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