Gen Xwhitepaper
- 1. 7701 York Avenue South | Suite 250, Edina Minnesota 55435 Using Self-Service Mortgage Sites to Attract Generation X Home Buyers A White Paper from Dexma, Inc. The housing market may be in the Given the fact that mortgage lending doldrums, but the long-term outlook for can increase deposits and lead to better the industry is looking good as Generation customer relationships, you might expect all X – those born between 1965 and 1979 community banks to offer mortgage loans – enter their peak home-buying years. to their customers. But running an effective mortgage operation today requires the This demographic group, made up of about community bank to meet Gen Xers where 62 million people, is a lucrative market well they’re at: online; and most community worth pursuing by community banks and banks don’t offer the kind of sophisticated other financial institutions. According to a online presence required to effectively reach recent National Association of Realtors® and serve these Web-savvy borrowers. (NAR) Profile of Buyers and Sellers, the average homebuyer is now around 41 years Generation X: First on old; among first-time buyers, the median age is 32. In just the next two years, 37 the Internet percent of Gen Xers and 27 percent of Of all buyers who used the Internet to search “Echo-Boomers” (those born after 1979) say for a home, 42 percent were 34 years or they plan to buy a home, compared to just younger. The Internet is the fastest growing 13 percent of Baby Boomers and 6 percent channel for mortgages, with 70 percent of of seniors. loan seekers going online to shop for rates. According to the National Association Studies show that banks that hold the of Realtors®, the Internet is used by 80 mortgage will sell, on average, twice as percent of homebuyers to find information many additional bank products to that on properties or communities; 61 percent customer as banks that don’t have the of first-time buyers used the Internet mortgage relationship. Moreover, the “frequently.” mortgage application process captures more customer information than any other bank Gen Xers were the first to adopt the product, providing a pool of data for cross- commercial Internet and trust online selling other products and services. information sources over traditional ones. www.dexma.com | 1.888.831.0955
- 2. and mid-sized banks that are hoping to attract Gen Xers’ business. Despite all of the money and effort that larger banks spend on branding, very few have attracted loyal Gen Xers. In fact, sheer size and slick advertising (usually an advantage) could very well work against these larger institutions. Gen Xers are savvy to the point of being cynical – they just want to know what’s in it for them. They understand there’s always an angle, and there’s no such thing as a free lunch. If you offer a competitive rate and make it easy for them to work with you, you’ll attract their business. Make it a fast transaction and a quick close, and you could well have their next transaction as well as their friends’ business. Tech Tools for Gen Xers A consumer-facing mortgage website that incorporates They’re also used to having a wealth of information a lender’s loan program information, products at their fingertips. While online, they’re not only and prices is the perfect tool to engage the Gen X searching for properties, they’re also shopping for homebuyer. Lenders can use this presence to reach out mortgage rates. The original “latch-key” generation, to anyone who’s online and seriously shopping for a Gen Xers are self-reliant and used to handling things mortgage. themselves. It’s not a surprise that many are filling out applications without assistance and seeking online A simple, yet sophisticated point-of-sale technology is approvals. As a group they like and respect companies essential for lenders that are developing new channels that allow them to act independently, with minimal of business with banks, brokers, builders, realtors, human interference. and other business partners targeting homebuyers of any age. Technology is the glue that binds lenders Speed is also important, as Gen Xers are used to with business partners who can help grow mortgage getting quick answers to their questions. Today’s business in whatever communities or markets they “snack” mentality means your sites must provide rich choose. content in miniscule, bite-size pieces. Tell them what they’re going to get by clicking and show it to them visually, with images that engage them. The more you Gen Xers Dominate 1st Mortgage Market enable them to customize their content, the better. So 11% your mortgage website must give serious homebuyers Gen X (22-42) the answers they’re looking for quickly, and enable repeat visitors to log in for future reference. Move the Gen Y (13-21) Gen X homebuyer quickly through the homebuying 45% Boomers (43-60) process, rewarding them with instant approvals and Silent (61-78) detailed customized rates and information. 43% In the ‘80s and ‘90s, Gen Xers saw their parents laid off by companies they had worked for their 1% whole lives. For this reason, this generation tends Source: Data from 1,200 Dexma lender customers to distrust institutions and brands and is unwilling to give loyalty easily. This is good news for small- www.dexma.com | 1.888.831.0955 2
- 3. Consumers who go online to a rich, transactional mortgage website are rewarded with a wealth of information. If they’re new and inexperienced, they can read all about the homebuying experience on the site; most sites enable lenders to easily configure and customize Web content to fit their process and products. Mortgage calculators enable homebuyers to make informed decisions on product options and rate trackers allow them to set a desired interest rate or monthly payment, automatically sending an e-mail when it’s available. Product and rate quotes are customizable for borrowers based on their specific loan information as well as product eligibility rules. Consumers should be able to see the interest rate, discount points, estimated closing costs, monthly mortgage payment (P&I) and APRs for a variety of products before making their selection. Effective websites also feature a mortgage application that takes just minutes to complete, as well as online disclosures. Qualified applicants are rewarded with a “genuine” pre-approval decision and lender-branded approval letter for suitable first mortgages and equity loans. If they haven’t already found a home, homebuyers can use this approval letter to shop for a home with confidence. Loan App's Submitted in One Session Loan App's Submitted After Hours 15.8% 18.3% One Session 8 a.m. - 5 p.m. Multiple Sessions After Business Hours 84.2% 81.7% Source: Data from 1,200 Dexma customers www.dexma.com | 1.888.831.0955 3
- 4. Boosting Customer Service with Technology Some lenders haven’t developed a robust website and loan documents such as approval letters and presence because they think it doesn’t support their disclosures. Today, online disclosures can be delivered focus on personal service. and accepted online, eliminating the time delay as well as the hassle and costs of printing and mailing. In fact, a successful website can help loan officers and In some platforms, users can upload documents into other lender employees provide better, faster service an electronic file cabinet where they can be updated, to consumers. Loan officers can take the consumer’s viewed and printed, thus reducing time, paper and the application over the phone or in person, filling out the hassle of tracking down documents. online application. Then, while the potential borrower is waiting, the loan officer can e-mail or hand them Elegant website design is not as important as speedy an approval letter and explain specific underwriting performance; if the site is too slow, many visitors guidelines and the information that’s required to will just click away to look for a site that responds complete their loan. more quickly. Therefore, it’s essential to look for a technology partner that can optimize your website’s performance. The rewards of a fast, self-service website Mortgage Website “Must-Haves” can actually be measured in dollars and cents: a web transaction costs the lender an average of 25 cents, • Current Interest Rates while Gartner Group estimates a phone call will cost • Calculators the lender closer to $5 or $10. • Quick Qualifier Banks that effectively deploy today’s mortgage • Online Application for 1sts & 2nds technology will be able to attract and retain more • Log-in for Returning Visitors mortgage business from Gen Xers—as well as any borrower who’s comfortable with the Internet. Lenders • Info. for First-Time Homebuyers with transactional websites have much higher pull- • “Instant” Online Approvals through rates, because they enable consumers and loan officers to complete the loan origination process anytime and anywhere they have Internet access. In addition, your loan officers will get their own “workbench” where they can see all of the loans in Get more information about their pipeline and where each application is in the mortgage origination technology process. The beauty of a fully integrated system is that once the data is in the system – whether the outsourcing with Dexma consumer or the loan officer entered it – it’s there and Dexma can help you close the generation gap and doesn’t require re-keying, which saves a lot of time appeal to Gen X and Y homebuyers. Our solution, and maintains data integrity. Ideally, services such as the Dexma Lending Suite, will help you build a appraisal, flood, title and mortgage insurance are also strong mortgage presence that appeals to online integrated into the system, so ordering these services borrowers while enabling you to provide better, is just a few clicks away. Later, community banks can faster service. We have helped our customers use this “single view of the customer” to drive deep increase their loan volume, decrease their relationships with borrowers. origination costs and improve productivity. Furthermore, originators and homebuyers should Visit Dexma today at www.dexma.com, be able to communicate with each other in real- or call 1-800-831-0955. time and view the loan file, underwriting conditions www.dexma.com | 1.888.831.0955 4