A Loan Officer’s Guide to Mortgages for First Time Homebuyers

Mortgages for First Time Homebuyers

Buying your first home isn’t just exciting, it’s also scary, overwhelming, and expensive. After all, purchasing a home is one of the biggest financial decisions that many people make in their lifetime. Therefore, selling mortgages for first time homebuyers is a great opportunity for you to provide excellent customer service. 

Mortgages for First Time Homebuyers

Let’s talk about the numbers.

-The average age of a first time homebuyer is 32 years old. 

-According to 2017 data from Ellie Mae, the median purchase price of a first time buyer’s home was $190,000, with 5% down. 

-Perhaps most noticeable is the fact that 41% of first time buyers carry student debt, with a balance of about $29,000 per person. 

-Those buying a home for the very first time make up 34% of all market transactions, which is no small number.

Okay, so that’s a lot of numbers, but what do they mean for you? First time buyers are an important demographic for mortgage originators to consider. They have always been. But, their needs and wants have shifted from previous generations. 

Personalize the Loan Experience

Becoming a top producer is all about personalizing the loan experience to best meet your buyer’s needs. If you want to read more about general tips and tricks for creating an amazing loan experience for your customers, check out our article on that topic, here

The Unique Challenges of First Time Homebuyers

First time homebuyers are often those in their 20s and 30s that face unique financial and lifestyle challenges. Very often, these young buyers have student loan debt. And, since they’ve been in the workforce for a shorter period of time, they may not have had time to solidify their career. Therefore, they may be earning less than they’d like. This can make saving for a down payment, on top of paying off student loan debt, feel impossible. 

In addition, your borrowers may have only ever rented. This means that they probably don’t know very much about the ins and outs about buying and home ownership. Because of all these unique factors, you can offer exceptional service by educating your borrowers. 

Educate, Educate, Educate

It may sound strange to say that your goal should be to increase your borrower’s knowledge of the loan process. But, in reality, a well-informed customer is one of the biggest assets you could want for your business.

When you educate prospective homebuyers, you diffuse the myths they may have heard about getting a mortgage. In addition, if a borrower feels like the process of buying a house is straightforward and transparent, they will be more likely to actually move forward with the process and use you for their mortgage needs. 

Talk About The Mortgage Basics

Mortgage vocabulary terms can be very unfamiliar and confusing to borrowers, especially if this is their first home buying experience. With this in mind, take the time to discuss mortgage basics with your borrowers. Do they know the specifics of interest rates, monthly payments, types of mortgages, what a point means? How about terms such as amortization, earnest money, equity, and principal? 

Although this may feel basic to you, put yourself in their shoes, and explain these terms in simple ways. Your borrowers (young and old!) will appreciate the transparency such a discussion would provide. Plus, it prepares them for any mortgage related situations they will have down the road. 

Discuss Their Budget

As mentioned above, first time buyers are often young, and face special financial challenges. Having an honest conversation about their budget, as well as any debt they may carry, is a critical first step. It can be easy to get carried away by the excitement of house hunting, and fall in love with a home that is out of budget.

In order to help minimize the chances of this, be honest with borrowers up front. Sit down with the hard numbers of their finances. Or, recommend a trusted financial planner to them, and help them develop a plan.

How much can they afford to pay in monthly payments? What should they plan to set aside for a down payment? How about home insurance, closing costs, and other related costs? All these items add up quickly, and it’s part of your responsibility to ensure that your borrower’s aren’t caught off guard.

Keep Them In the Loop

Not only does including the borrower in the process make them feel more comfortable, it increases education. Just like every other borrower, it’s important to keep first time homebuyers in the loop at all times. Sending loan status updates is one way straightforward way to ensure that your customers know what’s happening with their loan at all times.

Refer Them to Professional Partners

First time homebuyers may or may not already have a relationship with a realtor by the time they make it to you. Especially if they don’t already have a real estate agent, this is a great opportunity for you to offer value and help them through the process. Buying a home is stressful enough as it is, but a great realtor makes a massive difference in the experience. 

If you have been in the industry for a while, chances are, you have some great professional partner relationships. You probably already have an idea of which realtors are best suited for working with young or inexperienced buyers. Perhaps they are extremely consistent with their communications, or are willing to put in the extra time to make a buyer feel comfortable with every step of the process. 

What If You Don’t Have a Realtor to Recommend?

If a realtor like we just described doesn’t come to mind right away, don’t worry. Just start keeping an eye out for someone who shows these qualities. It can be a great benefit to your business if you have a real estate agent ready to recommend who will make your first time homebuyer’s experience exceptional.

Always Be Available

One of the best ways to support first time borrowers in the homebuying process is to simply be there. They will probably have more questions than the average customer, and they will appreciate your willingness to discuss any concerns they may have.

If you’ve never purchased a home before, some of the steps in the process can be confusing and even overwhelming. Consider the sheer number of documents that is required of a borrower: talk about daunting!

Make It Clear

If you really want to make your new borrowers feel comfortable approaching you, make this clear from the very beginning. You could remind them that you are here to help them at every step of the way during your initial meetings. Additionally, reiterating this fact in communications throughout the loan process can help boost their confidence in talking to you.

If you utilize SMS texting in your business (and if you don’t, you should!), this form of communication can serve as a low pressure option. For instance, if your borrowers have any questions, sending you a quick text message can feel less intrusive than picking up the phone, sending an email, or even stopping by your office. This can increase the likelihood that a first time buyer will approach you, which will help the loan process go more smoothly. 

Make Them Feel Special (Because They Are!)

You should strive to make every one of your borrowers special, since they each are. However, this is especially critical when it comes to providing service to first time homebuyers. Creating a delightful loan experience can be as simple as amazing communication, seamless use of digital platforms, and thoughtful post-closing marketing. Let’s discuss each of these elements.

Amazing Communication

We’ve talked a lot about communicating with your clients on the blog, but it bears repeating! As we mentioned above, sending consistent loan status updates is a great way to provide amazing communication to your clients. Additionally, placing your clients on helpful and education drip marketing campaigns is an easy way to continue to communicate with one simple click of the button.

Seamless Digital Platforms

Utilizing digital platforms is a great way to appeal to borrowers, especially those who are younger or generally new to the mortgage process.

 Pricing Engines

Loan Pricing Engines, like Optimal Blue or Lender Price, allow you to instantly calculate a borrower’s loan pricing options. Plus, you can send potential borrowers interactive calculators that allow them to see what their different mortgage options are, and how much they could expect their payments to be. 

With the Pricing Engine Integration, you can easily send pricing quotes for mortgages for first time homebuyers, right from your Jungo account.

 Digital Applications

Digital applications are a great way to appeal to borrowers, because they offer an easy and low-pressure entry point. Often, loan applications are confusing and complicated, but digital application portals guide borrowers through the process one step at a time.

 Document Upload Services

One of the least efficient steps in the loan process is often document submissions. For digitally fluent borrowers, a game changing option is providing a digital document upload service. Companies like Floify provide a borrower facing portal, in which clients can scan and upload the required documents directly from their smartphone.

 E-Signatures

Gone are the days of needing a borrower to come into your office to sign closing documents. Instead of relying on “wet” signatures, your customers can now sign from anywhere, at any time. To read more about e-signature portals, read our article on the top apps for loan officers

Thoughtful Post-Closing Marketing

Once you’ve closed mortgages for first time homebuyers, your job still isn’t over! Providing post-close marketing to your clients is always a great way to put their loan experience over the top. This can help encourage them to recommend you to their family and friends. Or even choose you as their loan officer if they need another mortgage or refinance in the future.

 Gifts and Cards

One of the ways that you can continue to delight customers even after they have their new home is through gifts and cards. There are many ways that you could approach this technique, such as sending holiday, loan anniversary, and birthday cards. Or, put together small gift packages for certain past borrowers!

If you don’t have the time or resources to provide this service yourself, Jungo’s Concierge program can take care of it for you! With one click of a button in your Jungo account, you can send branded cards and gifts straight to your past customers door. Want to learn more about the Concierge packages? Click here.

Provide Valuable Information

Looking for a more digital option for keeping up with your clients? Placing your past borrowers on a drip marketing email campaign is a great way to stay in their minds. One of the best ways to approach this method is to send them emails that provide value. For instance, you could send home DIY tips, or the benefits of building your home’s equity. Your customers will love to learn more from you! Plus, they may even forward that email to interested friends and family.

Jungo’s automated marketing campaigns do the heavy lifting for you. With over 400 prewritten email templates, you can quickly and easily place customers on a variety of marketing campaigns. These campaigns match their current stage in the loan process. The Keeping in Touch campaign allows you to automatically send helpful emails to past customers. You don’t even have to open your email account!

Bottom Line

Providing mortgages for first time homebuyers requires special planning and a thoughtful approach. Much like how you interact with your other borrowers, first time borrowers face unique challenges. Because of this, you can customize their loan experience to best match their needs. This will make them much more comfortable with their mortgage experience. And therefore, more likely to remember the home buying process as a delightful one.