You’d be hard-pressed to come across a 20-something who doesn’t use a smartphone for just about everything. From paying for a latte at Starbucks, to depositing a check right into a bank account, Generation Y’ers sure are savvy when it comes to digital technology.
And these days, that’s exactly how they’re getting mortgages, too.
Acute lending start-ups are paying close attention to the needs of the younger home-buying demographic, and have long been noticing their need for instant answers and online convenience. That’s why we’re seeing a host of fintech – or ‘financial technology’ – lending companies popping up everywhere on the internet. Homebuyer hopefuls can get pre-approved for a loan in a matter of minutes.
The millennial generation – which is in the 18 to 34 age group – is inspiring big changes in the mortgage industry. This demographic wants a technology-based mortgage application platform, as well as online resources to educate themselves on the loan process as a whole.
Millennials are used to having things done quickly thanks to the advent of digital technology, so it’s no surprise that they’re expecting the same when it comes to mortgage approvals and closings.
Millennials Want Convenience
One of the biggest factors for going the fintech route for a loan is the sheer convenience of it all. The process can be started and finished anytime, anyplace. Whether it’s at home, on the train to work, or at the local cafe, applying for a mortgage can all be done virtually. All dealings with the lender occur online so there’s no need to make a bunch of trips to the bank to hammer out the loan in person.
Millennials Wants Simplicity
The mortgage application process itself is simple and fast, and the time it takes to approve the application is minimal compared to conventional methods.
Lending criteria is also a lot more lax, without all the hoops to have to jump through to get a stamp of approval. Whereas a lengthy employment history or stellar credit is expected at traditional financial institutions, online lending companies can find ways to approve borrowers without all this history.
Millennials Want Speed
Forget about waiting days or even weeks to get an answer about the status of a mortgage application – approvals can be granted in as little as 48 hours. Many times this can translate into successfully snagging a home over another interested buyer who couldn’t get their mortgage closed as quickly.
Transparency is also an important component for Generation Y’ers, who want to know exactly where their loan stands in the mortgage process.
While perks like these will serve all customers well, it’s really the millennial demographic that’s driving it.
An increasing number of lending companies are waking up to the fact that the younger generation expects to be able to search and apply for mortgages completely online without having to physically visit a bank branch or even speak with a live agent over the phone.
As a result, more lenders are embracing technology that lets borrowers apply for a mortgage online and electronically submit all the necessary paperwork needed to get the process moving.
This is a DIY generation that looks online instead of to the bank for tools to get all the info they need about getting approved for a mortgage. And while they’re probably a bit more anxious about exactly who they go to for a mortgage, once they’ve solidified that relationship, they’re openly willing to share all the info needed to make the loan process move along.
The lending industry is going to have to get used to this unique brand of borrowers. This demographic represents the biggest group of homebuyers in the US – about 32% according to the National Association of Realtors. And this number is just going to keep growing into the near future.