A good lender offers a variety of options to suit their borrower’s diverse mortgage needs based on varying circumstances. There is not a “one-size-fits-all” mortgage loan, which is why non-QM products are so in demand today and new non-QM lenders daily enter the market. A huge population of people exist who require non-QM, and it’s not hard to find them. These are worthy borrowers such as the self-employed and those needing jumbo loans who just miss prime who cannot qualify for traditional loans.
However, there is another huge group of people wanting to buy homes – minorities. According to the National Association of Hispanic Real Estate Professionals, approximately 78% of new households being formed across the country are from minorities that include Hispanics, but also African Americans, Asians and women.
Many minorities can qualify easily through conventional financing, but plenty do not have expansive credit files, require larger down payments, and might rely on gift funds from family to purchase a home. Oftentimes, they think that homeownership is out of reach due to these circumstances.
As originators prospect and market to homebuyers, it’s important to understand how to effectively market to and educate minorities on available loan products. This will help increase volume, since it’s not going to continue to work to exhaust the same sources of new business. Hispanics, African Americans, Asians and other minorities make up a significant population of household growth, with the Hispanic population projected to have the most growth potential. The answer to helping them lies within a mix of alternative mortgage solutions. Having a lender who can explain how to speak to multicultural borrowers and has the products to offer is crucial. What was once a niche market is now the market.
Understanding diversity marketing is key and will grow in importance in the mortgage industry. Some minority clients have different values, experiences and ways of interacting. These customers like to know that a business understands who they are and what their needs might be. Featuring women, Hispanic families, and ethnic groups in ads is one way to let people know they have loan products for diverse groups. The photo isn’t enough, though. The content must be authentic, speaking towards products that are created specifically for their circumstances. Make clear that you know how to protect their financial health through homeownership. The message that you are an originator who gets real-life challenges and that everyone deserves the joy of homeownership, will go a long way.
Expressing a commitment to diversity and willingness to tailor loan options to those customers is key. How to do it effectively and continuously better can sometimes be a challenge.
One-size-does-not-fit-all and that should ring clear when reaching the minority market. A lender with experience can help guide you towards success. We at Angel Oak Mortgage Solutions market our non-QM products as solutions for a diverse buyer. This applies to people with varying circumstances, ranging from credit issues, self-employment, to gig workers among others. Many gig and non-traditional workers reflect the racial and socioeconomic diversity of our country. According to the U.S. Bureau of Labor Statistics, contract employees and a non-traditional workforce are more likely to be African American or Hispanic. These potential homebuyers can have challenges when it comes to qualifying for a home loan and might need non-QM solutions to qualify.
Marketing must connect with these consumers at a level that speaks to their culture, environment and way of thinking. Invite a lender who understands this to join your real estate meetings to help convey this message and effectively present the loan products.
Tackle The Multicultural Market
Homeownership rates among women, Hispanics, and other minorities are typically lower than other backgrounds based on data from the National Association of Hispanic Real Estate Professionals and the National Association of Women in Real Estate Business. According to the Urban Institute’s Housing Finance Policy Center, “In many cases, women tend to have lower income and higher debt-to-income ratios.” The Urban Institute also issued a 2017 report that women can be more reliable than men at paying their mortgages and fewer women foreclose on properties. Still, there are some lenders who think women and other minority groups may be higher risk, even though Hispanics account for nearly 63% of total net homeownership gains.
Homeownership could increase among minority communities if there was more education targeting these groups to promote options for lower- and middle-income families. Affordability and strict underwriting are additional contributing factors to the low homeownership rates. Originators could be leaving a lot of money on the table by not connecting with this diverse audience who want to purchase a home. Ad campaigns that speak directly to them can result in success and repeat referrals. An empathetic and authentic message works!
The Hispanic real estate group reports that 59% of Hispanics feel advertising is truly meant for them when it reflects their cultural values and 52% say so when it includes people who look like them. Sometimes, the best way to go about engaging minorities is to talk to them directly. Invite them to your office for a presentation or meet with a real estate agent group who specializes in minority markets. Learn how your products and services fit into their lives before explaining how you think your products might work for them.Then educate them on your loan products and how you can help. Becoming an advocate makes you a trusted resource that results in loyalty and referrals.
Showcase Your Own Diverse Team
The task of strengthening diversity and inclusion begins within organizations. Bringing people together from different cultures enhances the homebuying experience for both employees and borrowers. Support these efforts and use a lender who has a diverse group working for them. Visit them online and check out their leadership and group photos. A noticeable change happens when companies hire minorities and focuses their efforts on them.
Angel Oak’s Marie Griffith, vice president of credit risk, was one of our first employees, and now oversees the credit department in Atlanta and Dallas. She was recently named to National Mortgage Professional Magazine’s “40 Under 40” list for her contributions to the mortgage industry. As a female minority, Marie strongly believes that “in order for the mortgage industry to effectively service minorities, they must employ and rely on a workforce that reflects them.”
Home equity can be the most important and valuable asset that people own. Everyone deserves the opportunity to purchase their own home. Cast a wider net to pursue new market opportunities through a diverse group of people. The end result could be more referrals, a full pipeline to grow your business further, and a great feeling to go along with it.