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How Credit Unions Can Expand Millennial Mortgage Opportunities

Individualized, timely service and best rate possible for mortgage insurance can help seal the deal.

Capturing millennial mortgage business is a priority for credit unions heading into 2016. As the largest cohort in U.S. history, millennials represent the future of the housing market. Fulfilling their expectations are a must for any credit union focused on growing its membership and share of mortgage originations.

What are these expectations?

  • Millennials are price-sensitive
  • Millennials are time-sensitive
  • Millennials are technology-oriented
  • Millennials want to be treated as individuals

The right automated pricing tools can go a long way toward meeting those expectations and securing more of that millennial market share for individual credit unions and the movement as a whole. One such tool is the Arch MI RateStar program that Arch Mortgage Insurance Company is rolling out by year’s end.

RateStar matches Arch MI rates more precisely to individual loans than conventional rate sheets, giving credit unions a competitive edge as they reach out to millennial and first-time homebuyer segments.

Millennials typically lack the 20% down payment and finance their loans with mortgage insurance. By pricing coverage based on a more precise evaluation of risk, RateStar can help to make homeownership more affordable, says David Gansberg, president and CEO of Arch MI.

Credit unions already are well-positioned to capture millennial business since their mortgage rates generally compare favorably to those of banks, and RateStar’s risk-based pricing will further enhance their ability to offer lower-cost mortgages, Gansberg adds.

RateStar assesses risk on the basis of a broader range of loan and borrower attributes than rate sheets do, and identifies unique combinations as well as ranges of difference within those attributes on which to price. It rewards high-quality originations with lower mortgage insurance premium rates, which may contribute to lower monthly payments overall.

This generation values their individuality and expects the home loan industry to do the same, says Gansberg said. Our model recognizes members as individuals and carefully evaluates the risk they and their loans represent in order to determine an appropriate MI premium rate.

In December, RateStar will be available on most loan origination systems and pricing engines, as well as on Arch MI’s own mobile app. Using RateStar is simple, Gansberg says. Arch MI customers enter specified loan characteristics and obtain a rate quote instantly. They can save, share or print the quote for future reference and view side-by-side comparisons to pick the MI option that’s best for their member. Arch MI also will guarantee the rate for 90 days unless prevented by law.

Recognizing that fast, seamless technology is the default requirement for today’s successful mortgage lending, RateStar needs almost no process changes on the part of credit unions. We understand that some credit unions may have systems that oblige them to use rate sheets for now, Gansberg says. We’re also aware that it’s a new technology. Our personalized customer service teams are ready to answer questions and offer guidance during the RateStar rollout.

This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
November 16, 2015

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