The Benefits of Investing Time in Renters

Mike Cass

By Mike Cass

Renter Woes in Waconia: I’m working hard on the spring market and trying to decide if I should invest time and energy with the renters of today – will they ever be ready to buy a home?

There are a lot of factors at work right now to give us a positive outlook about the demand for homeownership and our ability to supply financing for that demand. It would seem it’s a matter of time, patience and preparation.

Let’s talk about demand for homeownership first. A study of current renters showed a clear desire to “own a home at some point” and that is very important. The millennials may be renting today, but 89 percent of them indicated the desire to own a home in the future. The American Dream of homeownership is alive and well and we need to nurture that dream and demonstrate to the millennial and GenX renters that homeownership is not just a dream, but an attainable goal.

Source: Freddie Mac, Study commissioned by NAR “Hurdles to Homeownership: Understanding the Barriers” Kenneth T. Rosen, Rosen Consulting Group

That means we need to focus our conversations with these prospects around the traditional benefits of homeownership they may not have heard clearly to this point in their lives. The tax advantages of homeownership were not impacted by the recent tax bill for the overwhelming majority of individuals, and the long-term ongoing increases in home values continue to demonstrate the value of a home as an investment tool. These prospects have fresh memory of the bubble and housing crisis, but the longer-term trend may not be as evident to this current group of homebuyer prospects and we need to help them see that opportunity.

If we can nurture the dream and demonstrate the value of homeownership then our next hurdle is helping these renters realize they can afford to buy a home.

We can help by investing time and energy getting to know their unique situation and challenges. If it’s a concern about student debt, we may be able to help them with the relatively new Income Based Repayment (IBR) options for student loan debt that can dramatically lower their payment and increase their lending options. Only recently has the mortgage industry changed the ways they view student debt and renegotiated IBR options and those changes can make a dramatic difference in your renter’s homebuying options.

If they have the income but are concerned about the down payment there are a plethora of down payment assistance programs they can tap into, plus accessing the bond loan financing options, USDA and FHA and VA programs all can mitigate down payment concerns. These home shoppers need to sit with experienced real estate agents and loan officers and explore their options.

We should also be prepared to say, “not now” to many of these individuals as well, but offer them a clear path to homeownership. That path may mean a savings plan, an income goal, credit counseling or any other form of advice to help them navigate their hurdles to homeownership.

Finally, we have to address the supply issue with these prospects. Wanting to buy a home is great and uncovering financing options to make the attainable is even better, but we have to prepare them for the reality of a tight listing market. Make sure your home shoppers are fully approved for financing with a reputable lender and a loan officer you trust and that they are not walking around with a simple prequalification letter in their pocket. If you are to win the eventual bidding war on the home they want, you will want them fully approved and ready to close quickly and cleanly. Encourage your shoppers to invest the time and energy to secure a full loan approval based on a thorough review of their income and credit, and to do that before they find the home of their dreams or that dream may remain just that.


Mike Cass invites you to submit your questions to be addressed in future columns. Questions may be edited for space or clarity. Send your questions to mcass@resultsmortgage.com. Mike Cass has served in various mortgage roles including loan origination, loan processing, underwriting, closing, post-closing and finance. He draws on these experiences as president of Results Mortgage LLC, a Twin Cities based lender.