If you’re a regular reader of this blog, I’m sure you’ve noticed my insatiable thirst for knowledge (as well as your Earth coffee, but that’s an entirely different story). As a guest on your planet, I want to learn all there is to know about Earth, its people and, in my unique case, the mortgage industry.
One point that I’ve really picked up on is that each individual human being has unique characteristics, and while you’re all very much alike, you’re also very different. This diversity is fascinating to me, probably because we don’t have as wide a range of differences back home.
On my planet of Amicitia, the level of diversity you have here unfortunately does not exist, that is, unless you include the changes that occur to Amicitians as we age: eye stalks drooping, thinning slime coats or the need of a hover-scooter to get around. Other than these age-related differences, we look and (most of the time) act very much like each other, give or take a few colorful moon spots on our backs.
What has impressed me even more during my extended visit is your celebration of diversity. For example, our parent credit union is currently running a fantastic and very insightful program during Black History Month. I’ve learned so much these first few weeks of February, and the month isn’t even over!
These types of celebrations are, in my opinion, great reflections of the credit union industry. Credit unions typically have a very diverse membership base. While the members share the credit union’s field of membership and an appreciation for the numerous benefits of a financial cooperative, each member has their own set of unique financial needs, including mortgages.
How can a credit union assist its diverse membership who have diverse mortgage wants and needs? Simply put, a credit union needs to offer a diverse mortgage product mix. One way this is encouraged is through government lending.
Often overshadowed in the mortgage industry by more conventional lending options, government lending presents an ideal opportunity for credit unions to help their diverse membership base become homeowners through flexible credit requirements and low to no down payments. The three types of government loans from which your members are most likely to benefit include those administered by the
- Federal Housing Administration (FHA),
- S. Department of Veterans Affairs (VA) and
- S. Department of Agriculture (USDA).
I previously provided more in-depth detail around each of these types of loans in my post, The Red, White and Blue Mortgage. I encourage you to read this post and learn more about the benefits each of these types of loans provides your members.
There are quite a few advantages for a credit union to offer government loans to its membership base. And these loans are quietly gaining in popularity with home buyers—in 2019, 1 in 4 mortgages were FHA, VA and USDA loans, and one-third of millennials choose FHA loans to purchase their homes. With these types of results and the need to continually diversify their mortgage offerings, credit unions have a lot of potential with government lending.
In addition, there are various other mortgage products available to diversify your mix. One example is HomeReady®. A product of Fannie Mae, the HomeReady® Mortgage is designed to help credit unions and other mortgage lenders confidently serve today’s credit-worthy low-income borrowers. According to Fannie Mae, the benefits of this program include down payments as low as 3%, flexible funding and competitive pricing.
Another factor that must be considered when trying to reach a diversified membership is the need to inform and educate your members about these products. You can’t simply build up your mortgage offerings and expect members to start filing applications. You need to educate your members and market your diversified product mix, both as a whole and as individual products.
Consider incorporating this information into home buying seminars and other member communications. From a member’s perspective, seeing that there are programs available to suit their individual needs speaks volumes. Plus, making this major financial decision with assistance from the credit union they already know and trust will certainly appeal to them.
The bottom line is that having diversity in your credit union mortgage product mix will help you reach diverse segments of your membership and meet their financial housing needs. Does your credit union have any unique products or programs to help your diversified membership? I’d love to hear about them as well as learn how your credit union celebrates diversity—that’s my thirst for knowledge for you!
As retired NASA Astronaut Ron Guran said, “Earth is a small town with many neighborhoods in a very big universe.” Diversity is all around us throughout the universe. By addressing and celebrating this, you’ll reach the goal of every credit union mortgage provider: Getting more members into homes.
HomeReady® is a registered trademark of Fannie Mae.