In his June 1 presidential proclamation, President Trump reflected on the important role homeownership plays in building household wealth, stabilizing neighborhoods, and fortifying the nation’s economic health.
For many hardworking Americans, however, the path to homeownership is not always clear. As the president noted, “Many young families are unable to achieve the independence they desire because they have difficulty saving for a down payment, overcoming regulatory burdens or gaining access to adequate credit.”
Enter community bankers. As trusted financial advisers with a stake in their customers’ success, community bankers can be a guiding force to help prospective homeowners navigate a complicated and protracted process and realize the dream of owning a home.
“Mortgage borrowers are not cookie cutter. Each has a unique story,” says Jack Hartings, president and CEO of the Peoples Bank Co. in Coldwater, Ohio. That is why it’s so important to work one-on-one with prospective homebuyers to identify the right loan to fit their circumstances and position them for success, he suggests.
Hartings says smaller community banks have as much to offer as the biggest lenders. Meanwhile, community banks should continue to seek out millennial customers, who represent the largest share of homebuyers (34 percent), and share with them the wealth of offerings available at their local community bank, he advises.
When developing a modern lending experience tailored to today’s prospective homeowners, community banks need to:
Create a strong online presence. According to the National Association of Realtors' (NAR) 2017 Home Buyer and Seller Generation Trends report, 93 percent of buyers 36 years old and younger (millennials) used a website to begin their home search. A strong online presence is key to attracting this tech-savvy demographic.
Explain the mortgage process. Define mortgage jargon and share and compare mortgage loan options. The Consumer Financial Protection Bureau and the Federal Deposit Insurance Corp. offer resources to help demystify the home-buying process for first-time homebuyers.
Leverage technology for greater efficiency. NAR reports that 58 percent of millennials and 46 percent of Generation X buyers (aged 37 to 51) found their home by conducting searches via a mobile app. Technology can also help banks streamline the application and approval process, providing greater efficiencies for the bank and a faster approval process for customers.
Consider financing alternatives. Many millennials carry student loan debt and may have less money saved for a down payment or closing costs. Be sure to highlight suitable loan program options to address these concerns.
“We often tell consumers when they come in to gather important documents—pay stubs and W-2s and statements on assets—to give them a good financial picture of themselves and what they can afford,” Hartings explains. Sometimes this analysis shows that now isn’t the right time to purchase a home. In such instances, community bankers are quick to create a roadmap for would-be homeowners that can help put them on the path to homeownership.
“I’m so proud when these customers come back to the bank and they have put in the work and now they’re ready to take the plunge,” he says.
Join @ICBA at 2 p.m. (Eastern time) Monday, June 19, for a Twitter chat that will highlight resources community bankers can share with customers to help them navigate the home-buying process. Follow the #HomeownershipChat hashtag.