Don’t be shocked, millennials are now the largest living generation in America. No need to be surprised by how many walk into your office looking to purchase their first homes. The time has come to start learning how to talk to them, and how to effectively help them understand the mortgage process. Below are some tips on how to best convey the terms of potential mortgages to your new young clients.
- A mere 15% of “old” millennials (aged 25-34) have more than $10,000 saved. That requires a bit of sympathy to relate to these clients. While a majority of them are forced with living at home with their parents, 90% would love to move out into their own place. Rising rates have made them incredibly skeptical, so they are extra wary of not having enough for large down payments. A shocking 71% of mortgages in 2016 were set up with less than a 5% down payment. Don’t be surprised when your millennial has very little up front.
- Teach them what it’s worth, and how their net worth rises as they purchase equity. The purchase of a home can easily be more cost effective of the rent they are currently paying. Putting this into perspective can help make their decision easier. In 2014 the Federal Reserve stated that the average net worth of a person raises by 36% when they purchase a home.
- Turn those random rates into physical money. By showing millennials exactly what interest payments they will be making helps them properly plan and will help secure them see the urgency in the lower rate. Consider using usmortgagerate.com to get quick figures and show how minimal rises in a mortgage rate can result in large expenses.
- Show them historical rates so they can grasp what you mean when you say there was an average of 4.15% interest in January of this year. That will mean very little to them, so by showing them the interest rates through the years, you can show them that in the past rates have been much higher. Presenting the rates as low in a way they will understand can help them see the bigger picture.
- Recommend they look into the buy now vs wait calculator so they can see what kind of money they will be saving by purchasing their first home now, as opposed to waiting. Show them the uncertainty that lies in waiting to save the 20% for a down payment, and they’ll be far more likely to realize how lucky they are for being a millennial.
They are skeptical and mistrusting of financial institutions, but that’s something you can put at ease. Teach them that there is nothing to fear with a new mortgage, and that you are working to get them the best possible deals out there. They are ready and willing to move, they just need a little guidance to get there.