Here’s what millennial home buyers really care about when getting a mortgage

I have a confession: I’m afflicted with information overload. It’s not just me. Those of us who work in financial services know all too well about scrolling financial news tickers, the alphabet soup of acronyms, and latest economic data sets.

As the CEO of Caliber Home Loans, a large housing specialty firm, I find this to be the case especially in the housing market. Of course, I am interested in the latest mortgage application and housing start numbers. But when I want to know what’s going on in the housing market, I go straight to the source. I talk with our loan consultants who interact with thousands of millennials who are now embarking upon the American Dream of home ownership.

Many reports show that millennials in the U.S. are entering the housing market in droves. In fact, millennial households are earning more than people in older generations did at the same age. According to the  Pew Research Center, this trend is driven by millennial women, 78% of which work more than 50 hours per week, versus 72% in 2000.

What is on the minds of these young American home buyers? First, there’s a (not incorrect) assumption that millennials want a robust online experience when applying for a mortgage. But they also want to meet in person. “I’ve had more clients come into the office to visit face-to-face in the past two years than I have had in the previous 10 years. They want to see you have a professional workspace and are in it for the long haul,” says Christian Johnson, a loan consultant in Caliber’s Dallas office who estimates that 40% of his clients currently are millennials. Because of the seemingly daunting process of obtaining a mortgage, millennials are seeking a partner to help them navigate the process.

Second, millennials may not understand their own credit rating. For most millennials, buying a house is the largest financial decision they’ve ever made, and they may not have thought about their own financial history. “It’s possible for a consumer to have tens of thousands of dollars in savings but have a FICO in the mid-600s,” said Josip Capelj, a loan consultant in Caliber’s Detroit office. “They’re also surprised that their down payment may not affect their interest rate.”

Indeed, home buyers can be dismayed when their quoted rate is above what they may have found online. Many first-time home buyers seek counsel from our loan consultants on ways they can improve their credit in hopes of getting lower rates. It’s incumbent on housing specialty firms to educate consumers on all their options and find the optimal solution. “The key is boosting everyone’s financial literacy. Because when millennials better understand their credit profile, they can act with more confidence when purchasing a home,” Capelj said.

Third, millennials focus intensely on down payment amounts and how much it will cost to obtain a mortgage. Because this is such a front-of-mind consideration, it’s imperative that housing specialty firms are clear about the numbers and have easy-to-use calculators for consumers to compare rates with other providers.

In order to help millennials receive the financing they need, it’s important that loan consultants explain all of the various products and offerings thoroughly. “Millennials are shoppers, from rates, to closings costs. They look for third-party reviews, like if they are buying a product on Amazon,” said Katie Simmons Hickey, a sales manager based in Caliber’s Reston, Va. office.

When it comes to understanding millennials’ views of the housing market, there’s nothing better than listening to those who talk to them directly.

Sanjiv Das is CEO of Caliber Home Loans, one of the largest housing specialty firms in the US. He was CEO of CitiMortgage from 2008 to 2013.

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