How Credit Unions Can Support Multi-Generational Home Buying Trends

Originally published on CUInsight.com

Multi-generational home buying is more common than ever before. In fact, Realtor.com reported that multi-generational households now comprise 4.5% of owner-occupied homes.

“We’re seeing more families purchase homes together because qualifying for a mortgage has become challenging, and many just don’t have the money to do it on their own,” said

Erick Padron, VP Lending, Sr. Management at Tropical Financial Credit Union.

In many cases, multiple household incomes are needed to qualify, and families are choosing to live together or temporarily purchase a property together with the understanding that ownership may change later.

To cultivate member trust and improve retention, credit unions must recognize this growing trend and support this group of buyers with the information and resources they need.

Challenges multi-generational buyers face

Qualifying for a mortgage with multiple income sources, debt-to-income ratios, and different credit profiles is one of the most significant hurdles multi-generational buyers typically face. Determining who will be listed on the mortgage versus the property’s title may also be an obstacle.

Down payments can be tricky as well, especially if a family member contributes a gift. That’s why everyone involved should understand the requirements, documentation guiines, and financial responsibilities before moving forward.

To help multi-generational buyers overcome these issues, credit unions need to prioritize education.

“Families want guidance through what can be a more complicated financing process, and every situation is different,” explained Padron.

When meeting with multi-generational buyers, credit unions should focus on affordability. The goal is to ensure the home is feasible and the mortgage payment aligns with the family’s financial goals.

“It’s also important to talk about preparing credit before applying and making sure everyone understands how the ownership structure will work in the future, ” explained Padron.

Educational seminars are another great resource for these types of buyers because they give families an opportunity to ask questions and better understand the mortgage process before they buy.

Ideal mortgage products for these buyers

Fortunately, many credit unions can keep certain loans in their own portfolio when appropriate, rather than selling every loan on the secondary market.

“That flexibility can help create solutions for qualified borrowers whose situations don’t always fit standard guidelines,” Padron said.

The best mortgage products for multi-generational buyers depend on a variety of factors, including income, credit profiles, and long-term goals.

However, Padron suggests conventional fixed-rate mortgages, adjustable-rate mortgages (ARMs), jumbo mortgages, home equity fixed loans, home equity lines of credit (HELOCs), and mortgage refinance options.

“These products provide flexible financing solutions to meet a variety of homeownership needs, whether members are purchasing a home, refinancing an existing mortgage, or leveraging their home equity for other financial goals,” explained Padron.

Most importantly, they allow credit unions to provide personalized solutions that best meet our members’ financial needs and help them achieve their homeownership goals.

The information reported in this document, financial and otherwise, should not be construed as either legal or investment advice, nor does it represent the views of ACUMA, its Board of Directors, its staff or its members. The author presents information current at the time of publication and is designed to educate ACUMA members and others interested in the credit union mortgage lending industry.