Mortgage Lending: A Texas Perspective

young couple dreams of buying future house together
Stephanie Schwenn Sebring Photo
Contributing Writer
Fab Prose & Professional Writing

3 minutes

RBFCU focuses on communication, education and low down payments to assist young homebuyers in a tough market.

In densely populated areas, younger buyers are still apprehensive and struggling to buy homes, says CUES member Robert Zearfoss, chief lending officer of $16.9 billion Randolph-Brooks Federal Credit Union, Live Oak, Texas. “Realtors in our area are seeing first-time buyers priced out of the market from the large amount of appreciation of the last 36 months. They also see buyers more willing to overpay for a home rather than lock into a higher interest rate, with many simply waiting for rates to drop. A lack of education and experience to confidently move forward has also impacted homeownership for younger age groups.”

Zearfoss says many younger buyers in Texas are also choosing new construction today. “Builders here heavily incentivize young buyers, paying their closing costs and offering other inducements. It makes sense for these buyers because they can’t compete with cash offers for homes in hot markets.”

He notes that even with a cash offer, buyers are not apt to stand out because there are often several offers on a property. It usually takes an above-listing cash offer to win the deal, which pushes the first-time buyer farther out from the city where buying is less competitive.

Most first-time buyers are also tech-savvy and comfortable researching the mortgage process and rates online. “Still, they prefer to come in to confirm their understanding,” says Zearfoss. “The key is to ensure they talk to a trusted advisor before getting too far down the mortgage path.”

RBFCU learned long ago how successful the national homebuilders’ model has been. “Many national builders have their own mortgage and title companies, making it seamless to purchase a property,” Zearfoss explains. “To counteract this and install a trusted advisor throughout the mortgage process, we created a title company, an appraisal operation and purchased a real estate brokerage operation (Kuper Sotheby’s International Realty).

“Purchasing a home can be a daunting experience, but credit unions can encourage young homeowners that a home is a worthwhile investment,” Zearfoss continues. “Education should focus on the basics of the transaction (pre-approval, post-closing, timelines, requirements, etc.), paired with seminars either in person or virtual. Younger buyers are accustomed to teaching themselves through services like YouTube and want to be informed.”

RBFCU assists first-time buyers by providing transparency and education regarding credit and budgeting practices during approval. “We explain how mortgage rates and down payments work, how to compare closing costs and more,” Zearfoss says. “This information helps buyers feel more confident and informed. Offering more flexible options can also benefit younger buyers.”

After the loan, credit unions can create programs that follow up with buyers six to 12 months later, showing how much their home has appreciated. These efforts help build long-term relationships with members.

To assist young homebuyers, RBFCU:

  • created a 100% loan-to-value home loan with no mortgage insurance required to assist those without down payment funds—according to Bankrate, the typical LTV ratio for most lenders is 80%, requiring a 20% down payment;
  • regularly conducts homebuying seminars targeted to younger buyers;
  • has made prequalification letters a standard practice in robust markets;
  • has frank conversations with buyers about strategy and expectations; and
  • created follow-up communications to build stronger connections.

Owner of Fab Prose & Professional Writing, Stephanie Schwenn Sebring assists credit unions, industry suppliers and any company wanting great content and a clear brand voice. Follow her on Twitter @fabprose.

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