Using Data to Create First Time Home Buyers

Big DataRecently, I wrote about how the national home ownership rate was falling in America. Fewer folks were realizing the dream of home ownership. That’s not memberlicious. Credit Unions can certainly step up their game and help more people become home owners.

But it’s not easy. It takes time, money and commitment. There lots of Credit Unions that have built their mortgage business around first time home buyers. They’ve done the seminars, created balance sheet products, worked with Realtors and home ownership agencies and there’s lots of good ideas.

I met with my friend Gil Chavez, Director of Mortgage Lending at Consumers Credit Union in Illinois, a few days ago. Gil is a diehard mortgage guy and more importantly a great guy. He told me about an idea about attracting first time home buyers that I thought was worth sharing…..

Big Data seems to be a buzzword these days. We hear it all the time. There’s consultants charging gobs of money to help Credit Unions develop Big Data strategies, but maybe we don’t need Big Data to create first time home buyers.

All of our Credit Unions do consumer loans. Most have a fairly standard loan application. We ask members about their living arrangements. Do you own, rent or live with parents is the question on our loan application. And we ask them the monthly obligation.

What if we used this information for more than decisioning the car loan or credit card?

What if we used this information to build a stable of potential first time home buyers?

What if we started capturing those members who rent and their rent payment? We could translate that rent payment into how much of home they could afford. For example, if a member has an $800 rent payment, they could get a 30 year fixed rate mortgage with a 4.5% on a $125,000 loan for about $630 per month. The remaining $170 could go towards taxes and insurance. So for roughly the same amount we could get them in a home if they had the down payment.

Shouldn’t we be telling members that?

We could build a database of these members and their rent payments and have some excel wizard do some calculations to show the price point for their home. Then we could build a drip marketing campaign around it to start showing these members about how their Credit Union could help them with home ownership.

Don’t want to get that complex? Then just capture the name and email of these members who are renting or living with mom & dad. Start emailing them once a month about the benefits of home ownership, tips on how to pick a Realtor or about a Realtor referral program, or promotions for first time home buyers.

If we used the data that we already have from members perhaps we can start helping more members with home ownership!

Thanks Gil for the memberlicious idea!

One thought on “Using Data to Create First Time Home Buyers

  1. Tim- Thanks for your ideas (and Gil’s) regarding putting the data to work. I didn’t want to miss the chance to share a few comments about my visit to MGIC’s 2014 Lending Conference. While in Milwaukee I had the opportunity to speak about WPCU’s efforts toward 1st Time Homebutyers. 53 % of WPCU’s purchase loans in the last 6 months have come from FTHB’s. Other lenders (mostly big banks) were a bit puzzled by the success and percentage compared to theirs. The message I was attempting to deliver was it does take money, time and effort. It also requires the CU (or lender) to make the decision to concentrate on 1st Time Homebuyers, identify the target market and help to educate the borrowers. The data is very important but making the commitment is the first step.

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