First-time home buyers are not the only consumer segment driving the U.S. real estate market. In the latest Home Buyer and Sellers Generational Trends Report, the National Association of Realtors (NAR) stated “younger” baby boomers (ages 53-62), “older” baby boomers (ages 63-71) and the “silent generation” (ages 72-92) combined to make up 38% of all U.S. home buyers in 2017.
The latest U.S. Census data shows senior citizens are a growing demographic in the United States. As of 2015 Census, there were 47.8 million senior citizens (people age 65 or older), and the senior citizen population was projected to expand to 98.2 million by 2060.
Reverse Mortgage Loans — The Default for Seniors
Reverse mortgages, or home equity conversion mortgages (HECMs) as they’re officially called, provide seniors the opportunity to utilize some of the equity in their homes for immediate expenses. Seniors who are struggling with managing financial obligations may look to reverse mortgage loans as an alternative to a home equity line of credit (HELOC). Reverse mortgage loans are often attractive to seniors because payment can be a lump-sum, monthly cash payouts, a line of credit held in reserve or a combination of all three. Upon sale of the home, the borrower or the borrower’s estate is responsible for replaying the cash received from the reverse mortgage, plus interest and other fees, to the lender.
To be eligible for a reverse mortgage, a borrower must be the primary resident of the property, must be at least 62 years old and should own a home with no remaining or little remaining mortgage balance.
According to the Q2 Mortgage Consumer Profile Report, six new consumer segments were prevalent inquirers for information about reverse mortgages. The new consumer segments were older, retired, affluent and moderate income, living in diverse geographies.
In a recent article, Forbes reported that one of the common reasons borrowers are rejected for reverse loans is related to credit histories or scores. Data from the Q2 Mortgage Consumer Profile Report indicates the share of “excellent” credit scores more than doubled from Q1 2018 to Q2 2018 for the reverse market, with the shift pulling from “good” credit scores. Loan marketers should consider including messaging within reverse mortgage promotions that explains the parameters of the loan, along with comparing how this loan is different from a traditional mortgage or a personal loan.
Move Over Reverse: There Are More Mortgage Products to Market to Seniors
Even when looking to pull equity, reverse mortgages are not the only viable option for seniors.
Cashing in on Equity with Cash-Out Refinance
Senior home equity jumped to $6.3 trillion in Q1 2018 — an all-time high. For seniors with high home equity amounts, especially younger boomers who do not yet qualify for reverse mortgages, the cash-out refinance may be an attractive mortgage option that allows seniors to capitalize on their current equity. And the monthly repayment plan associated with refinance mortgages can be more manageable and easier to plan for than the lump-sum due upon home sale for reverse mortgages.
Marketers of cash-out mortgages should consider a content marketing strategy that is geared toward answering questions most commonly asked about refinance loans and comparing reverse mortgage and cash-out refinance benefits.
Growing Families Can Require Multi-Family Home Loan
Multigenerational living has increased to 64 million Americans as reported by Pew Research from earlier this year. According to data from the Mortgage Bankers Association (MBA), Q2 2018 commercial and multifamily mortgage loan originations rose by 4% from Q2 2018 and by 32% from Q1 2018.
Senior citizens may find the prospect of purchasing a multifamily property appealing because it could allow for their children and grandchildren to occupy units within the home while providing an increased level of privacy compared to single-family homes. Plus, if a senior purchases a multifamily property and collects rent from relatives living in other units, they may be able to write off expenses related to rental income and deduct the prorated portion of the mortgage interest. According to Realtor.com, owner-occupied multifamily homes are often the preference of homeowners living with members of their family, such as their adult children or elderly parents.
Embrace Technology When Marketing to Seniors
Senior citizens have become tech savvy. In fact, 82% of seniors ages 65-69 use the internet and 59% have smartphones. Here are some additional statistics related to senior internet usage:
- 75% of U.S. adults 65+ are online at least once a day
- 47% of U.S. adults ages 65-69 use social media
- 25% of U.S. adults 65+ play online video games
Google is the dominant search engine for most of the U.S., but seniors index heavy for Bing and Yahoo usage. Mortgage marketers running search campaigns should consider diversifying their budgets to test Yahoo (now part of Oath) and Bing, both of which may offer lower costs per click than Google.
Senior consumers are more likely to trust direct mail than younger consumer groups, and a high proportion of seniors actively use email and text messaging. Seniors also index high for newspaper consumption, making local print advertising a viable form of mortgage advertising to this market. Based on this data, mortgage marketers targeting seniors should not hold back on digital marketing. But they should also maintain targeted, traditional awareness generation vehicles.
What to Remember When Marketing Mortgage Products to Seniors
Mortgage marketing requires making complex subjects approachable and understandable. Avoid jargon or slang when marketing mortgage products to seniors. Using complicated language or referencing the latest online viral campaign may not help you connect your message with your audience. Be aware of how your content can be educational and informative. As you are unveiling mortgage products to seniors, create messages that help them identify the solution to a problem or concern they have, and do not assume there is only one type of senior lifestyle.
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