Mortgage professionals are wondering when the Millennial generation will finally fly the coop and purchase their first home. When they do, loan officers who effectively connect with Millennial home buyers will reap big, profitable benefits of business.
First, let’s look at some background information about this generation. The median household income for a Millennial older than 25 is $38,220
Why is this important?
By industry standards, a salary in this range allows a Millennial approximately $115K in purchasing power in regards to a potential mortgage.
A typical monthly housing payment (principal, interest, tax and insurance) shouldn’t go over 28% of pre-tax income. Take that median income and divide it by 12 (assuming this is AFTER taxes) and 28% of that monthly total is approximately $890.
But that’s not the full picture.
Don’t forget that the Millennial generation faces unique difficulties in affording that house note. Once you factor in the average monthly student loan payment of $351 and the average car note payment of $503, many Millennials are hesitant to take on the commitment of buying a house. After all, if they were ONLY paying for their student loan, a car and the house note, that leaves the average Millennial with $1,441 a month. Let’s not forget about additional expenses like electricity, car insurance, food, gas, credit card debt, and 401K.
Potential Millennial home buyers are asking themselves, “Do I really want to move out of my old bedroom at Mom and Dad’s just so I can eat ramen noodles and peanut butter in a three bed, 2 bath house that needs a million renovations that I don’t know how to do myself?”
For mortgage professionals to appeal to this generation, get ready to throw the old handbook out the door.
Technology is Here!
What makes a Millennial tick? Technology! This generation grew up with the internet and smart phones. They will be looking online for recommendations on the best mortgage loans for first time home buyers, and using apps to access information. At a minimum, employ a web presence that speaks to this. Be advised they will look at MULTIPLE websites before decided to do business with you.
Make sure to cultivate a steady brand presence on the web. Also, pay attention to social media sites. Be sure they are engaging, with relevant content that appeals to the Millennial generation. Have a feel good story about how your company supports a local charity? Post it on social media. Millennials want a CONNECTION with you. Any “feel good” content will go a long way.
Say What You Mean, and Mean What You Say!
Millennials crave an authentic buying experience. It’s critical to be 100% honest and open with them. If they don’t believe in your brand or what you stand for, they will walk away, guaranteed.
Educate, Educate, Educate!
Millennials are learners, so it’s no surprise this generation has the highest student loan debt in history. If they don’t know much about a subject, they research. Smart mortgage professionals should plan on hosting educational webinars, and crafting white papers, eBooks, infographics and how-to guides posted online with easy access that educates young borrowers on all the facets of owning a home and applying for a mortgage loan. A consultative approach tends to work best.
The Millennial generation seeks a connection. Something that goes beyond the traditional buyer/seller dynamic. Whether it’s your website, eblasts, social media posts, advertisements, or even your persona, always keep in mind that this generation wants you to "get them".
How can you do this?
A more casual approach is the key. This makes you relatable. Take measures to make them feel comfortable around you. Use their lingo. Keep it simple, friendly, but still professional.
Hopefully 2017 will be the year Millennials decide to buy their first house. They want to take the home ownership plunge, but the thought of not being able to do the fun things they want and spend the money they want will scare them. Mortgage professionals should be friendly and informative, and open about all the benefits of home ownership. If they trust you, Millennial home buyers will end up begin great customers!