qualify. Referrals of other professionals removes more stress from the transaction because once again, they can focus on the purchase instead of shopping for all of the services associated with the transaction. In addition, referring them to other experts also makes it more likely they will experience a smoother transaction. On their own, they are more likely to obtain the wrong information or hook up with service providers who don’t provide the best customer service. Referring experts such as yourself with good service records should be the least you can contribute to the transaction. Of course, these referral relationships should go both ways and these
high level relationships should increase your business in the long run. A strong referral starts you out in a position of trust, which again, is imperative if you are going to lead first-time buyers through a successful and stress-free transaction...? Dave Hershman is a leading author for the mortgage industry with eight books and several hundred articles to his credit. He is also head of OriginationPro Mortgage School and a top industry speaker. Dave’s Certified Mortgage Advisor Program can be found at www.webinars.originationpro.com. If you would like to stay ahead of what is happening in the markets, visit ratelink.originationpro.com for a free trial or e-mail success@hershmangroup.com.
The Decade of the First-Time Homebuyer By Mike Lesmeister, CRMS
driving those renters who can qualify to homeownership. If indeed, the first-time homebuyer represents the backbone of the housing market for years to come, how will you capitalize on this trend? Here are some simple strategies a mortgage originator can pursue to position themselves as an expert: 1. Familiarize yourself with first-time homebuyer assistance programs in your state and align yourself with lenders that embrace these programs. Many lenders don’t want to invest the time and money understanding and participating in these programs. 2. Introduce yourself to the leaders of the various Community Development Corporations (CDC) in your area. These are the organizations holding the purse strings of the first-time homebuyer and downpayment assistance programs, so they are certainly good people to know. 3. Determine who the real estate agents, builders and developers are that specialize in entry-level housing. If this is where the buyers will be looking, you want them to find you. Perform online searches for agents that work with first-timers and see who is conducting first-time homebuyer seminars in your area. 4. FHA and VA loans are the overwhelming financing choice for these buyers, so become intimately familiar with these programs and the ongoing changes with them. Hosting Realtor and homebuyer seminars that focus on the intricacies of government loans programs will position you as an expert in the field.
O MARCH 2010
Mike Lesmeister, CRMS, is a licensed mortgage loan originator and managing partner with Home Loan Specialists Inc. based in Houston. He has more than 20 years of financial services experience and is also the founder of Blue Ribbon Agents, a Realtor marketing program for Houston area real estate agents. Mike may be reached by phone at (832) 2861600, or by visiting www.hlstx.com. You can also follow him at twitter.com/mikelesmeister or connect with him at linkedin.com/in/mikelesmeister.
TENNESSEE MORTGAGE PROFESSIONAL MAGAZINE
In the ever-changing mortgage markets, the successful mortgage originator has to be nimble. Relying on strategies that worked in the last few years won’t necessary help you survive in a market that is expected to further contract over the next couple of years. Maybe you have more high-end purchase business than you can handle, but if you don’t, seeing yourself as too good for the entry-level buyer may end up costing you more than just a loan or two.
www.NationalMortgageProfessional.com O
Wayne Gretzky, the National Hockey Now, many of you will argue that the League Hall of Famer, once told a first-timers who accounted for roughly reporter, “A good hockey player plays 50 percent of all home sales last year where the puck is. A great hockey play- was an anomaly; that this new record er plays where the puck is going to be.” was driven purely by the temporary This philosophy should “fix” of the first-time be no different for a homebuyer tax credit. mortgage loan originator, But before you go back to since we too must adapt your desk and pick up the to the market environphone to buy more refi ment around us. Where and loan modification do you think the puck is leads, let’s take a look at going to be over the some facts. course of the next year (or First, every major con10) and how have you sumer trend in our history positioned yourself to has been driven by our take advantage of it? demographics, most notably, Clearly, much of the the Baby Boomer Generation mortgage market over the which drove the sale and “… the average age past year has been driven of first-time buyers is development of everything by refinancing and firstfrom disposable diapers to 33, we should feel time homebuyer purchasmutual funds. As these es. The refinancing mar- confident that as this Boomers age and move population segment ket has been as dependinto their non-income ages, they will be able as the seasons for earning years, the conthe past couple of sumer effect of Boomerlooking for homes, decades. You could rest related cohorts will begin just as the Baby assured that every few Boomers did, provid- to diminish. Who, if anyyears would bring a rate ing fertile ground for one, will take their place? reduction that would The growth of our populahomeownership drive homeowners to the tion, and the characterisopportunities for a refinancing table as pretics of the consumer, will decade or more.” dictably as geese migratbe driven once again by ing south for the winter. immigration as it was for However, the future economic environ- the early part of the 20th Century. Unlike ment will challenge this cycle and likely many industrialized countries, the U.S. change the dynamics of our business still benefits greatly from immigration. significantly. One thing we will continue While our birth rate is roughly the poputo be able to count on, however, is the lation replacement rate, our population strength of the first-time homebuyer growth rate of one percent is at or above market. the world average, which is significant
for a nation of more than 300 million people. According to the U.S. Census Bureau, fully one-third of our population growth can be attributed to immigration, with Hispanic and Latino Americans representing more than half of that growth. They also had the fastest-growing rate of homeownership of any racial group over the last 10 years. These immigrants will be the homebuyers in the decades to come. Beyond simply the growth of our population, we are also seeing that while our overall population is “graying” due to our aging Baby Boomers, people under age 20 make up more than a quarter of the population. If, as Elliot Eisenberg’s study of First-Time Homebuyers found, the average age of first time buyers is 33, we should feel confident that as this population segment ages, they will be looking for homes, just as the Baby Boomers did, providing fertile ground for homeownership opportunities for a decade or more. Beyond the long-term trends that favor first-timers, there are also tactical reasons to focus at least part of your marketing effort on this client profile because the financial incentives for purchasing a home are considerable. In addition to the first-time homebuyer tax credit, there are also downpayment assistance programs and other first-time homebuyer programs sponsored by state and local governments that can assist buyers in getting into their first home. Far from the seller-funded shell games of the past, these organizations provide valuable resources at a time when virtually every privately-funded concern is tapped out and credit has become tight, to say the least. These programs can provide assistance in amounts of $30,000 or more depending on your area. To be fair, there is certainly bureaucracy associated with downpayment assistance programs, and they are not for everyone, but lenders who hope to penetrate this market should become familiar with what is available in their market. With possible Federal Housing Administration (FHA) changes that include higher downpayments and reduced seller concessions, these programs will take on a great importance. Lastly, as a result of the housing slowdown, home affordability is at its highest level in decades. According to the Center for Economic Policy Research, median home prices averaged 15 times annual rent for decades … until the housing bubble. In some parts of the country, this factor reached 25 times rents and only now are we seeing the averages approach equilibrium again. As we continue to work our way through the glut of housing supply, the monthly debt service on a mortgage will become more economically attractive than comparable rents,
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