The collapse of the housing market and the resulting 2008-2009 recession will be long remembered for its negative influence on home ownership. But there is a lingering concern among some consumers that buying a house — and more specifically, securing a mortgage — remains a challenge, only possible for those with good-paying jobs, high credit scores and lots of savings. And even then, tougher standards can still get in the way, as former Fed Chairman Ben Bernanke recently experienced when he tried (unsuccessfully) to refinance his own home.
For many, the tighter post-recession lending requirements make home ownership seem a distant dream. But in reality, home buying and mortgage lending are picking up pace, with many communities nationwide seeing an uptick in home sales and purchase-mortgage activities.
Consumers need help separating fact from fiction as they look to buy homes today — a role tailor-made for credit unions.
Change Your Focus
Credit unions’ history and philosophy of member service uniquely qualify them to educate and advocate for members throughout the home-buying process. But for most of these institutions, it takes a change in mindset.
Many credit unions offer quality mortgage options, with competitive rates and feature-rich conveniences members are sure to love. The problem is, these credit unions don’t engage members early enough in the process. Most people start their home search long before they consider loan options. To ensure members know how their credit union can help, connect with them early about related services that complement mortgage loans.
How? Reposition your credit union as members’ real estate services provider from the beginning. Instead of waiting for home buyers to come to you for their loans, reach out to them where they are —on the Internet. Be members’ total resource for home buying: access to MLS listings, research on local markets, articles on home ownership, referrals to pre-screened realtors, home-buying seminars and other helpful assistance.
By offering members a place to start their search — and stay throughout the process — they are more likely to turn to you for financing.
Educate And Advocate
While some lending and mortgage rule changes have made the buying process more complex, purchasing a home is not all that challenging for most borrowers. To serve home buyers, your credit union’s role is part cheerleader — to provide encouragement and help lessen anxiety —and part educator — to provide helpful information and set realistic expectations. Here are some topics to address with members:
Mortgage Options: Explain to members that a variety of loan choices are available today, for both well-qualified borrowers and those with specific needs. For buyers with smaller down payments and/or lower credit scores, remind them that the government offers special lending options such as those from the FHA and VA. Let members know their credit union can help them through the process. Or, if needed, you will help them get in track financially so they can work toward their dream of homeownership. Bottom line: It’s not as hard as some members think to purchase a home loan in today’s market.
Documentation Needs: Buying a home today involves a lotof documentation. Help buyers understand why this has become a standard process to better protect them — making sure they understand what they are getting into and that the mortgage is within their means. They should expect lenders and underwriters to ask more questions, closely inspect their income statements, and scrutinize their deposit history. This is the normal course of business today.
Time Considerations: It’s estimated that buying a home — from the time members start thinking about it to the actual purchase — takes up to 18 months. And many outside parties will participate along the way. Manage expectations to help members better understand the time required and what’s expected in the closing process. Help them see that while it isn’t quick, it’s worth the wait.
To begin helping your members, join CU Realty Services on Wednesday, Nov. 5, at 9 a.m. EST for a free webinar discussion of the latest market research and three key real estate trends every credit union should know. The webinar will help credit unions reach more members, build better relationships and make more mortgages. Click herefor more information and to RSVP.
The housing market has changed, creating both a need and an opportunity for your credit union to be positioned as homebuyers’ resource for education and funding options. By taking advantage of new strategies to reach more prospective homebuyers, you can strengthen your role as a member advocate. And that leads to long-lasting, trusting relationships.
Tina Powers is COO of CU Realty Services, a CUSO helping credit unions nationwide increase their purchase mortgage business by becoming their members’ first point of contact when buying or selling a home. For more information, contact firstname.lastname@example.org or visit www.curealty.com.