How To Better Serve Latino Homebuyers In 2023 — And Beyond

BY ALEJANDRA DENDA, SPECIAL TO NATIONAL MORTGAGE PROFESSIONAL MAGAZINE

It has long been known that Latinos are a powerful economic force — and yet recent statistics are startling. If U.S. Latinos were a country, their economic output would rank fifth in the world, above India and the United Kingdom, according to a study from the nonprofit research organization Latino Donor Collaborative. In terms of purchasing power, they spent $1.84 trillion in 2020 — an amount greater than the entire economies of Canada and South Korea.

Zoom in on Latino homebuyers and the figures are equally impressive.

According to the 2021 State of Hispanic Homeownership Report from NAHREP (The National Association of Hispanic Real Estate Professionals), Latinos are predicted to account for 70% of homeownership growth over the next 20 years, the only racial or ethnic group that will see an increased homeownership rate.

Sounds like easy money for mortgage loan originators, right? Well, not so fast. That same report warns that the growth is not guaranteed because the mortgage industry needs to create a more conducive environment for first-time buyers, many of whom are Latinos. Other barriers include housing availability (too few homes for sale in the desired price range), affordability and the access to credit for the self-employed.

It is true that it will take time and concerted effort to fix the large-scale, systemic industry barriers. However, there are plenty of actions loan officers can take right away to better serve Latino borrowers — and tap into this economic juggernaut.

Key Areas To Focus On

Language o idioma — Hispanics are not a monolithic group. While there are several factors to consider when it comes to language, an important one is the generational status of your target buyer. For example, secondgeneration Latinos were born in the U.S. to parents from another country. They are often bicultural, speaking Spanish at home and English with friends and coworkers. It may seem logical to communicate with this group in English only. However, research reveals that U.S.-born Latinos actually prefer brands that show respect for their culture and appreciate them. Even though they are fluent in English, they want to know you are trying to connect with their culture.

On the other hand, you may need to communicate with first-generation Hispanics in Spanish because there is a language barrier to overcome. Still, in this case, it’s more nuanced than simply translating English marketing copy to Spanish. Marketing materials need to be developed with an audience-first approach, delivering what those borrowers really need.

Culturally aware content — Whereas non-Hispanic whites may grow up in households in which the benefits of homeownership are embedded at an early age, Hispanics are often raised in homes where discussing finances is almost taboo. For these younger Latinos, that lack of conversation about money with their families makes it harder for them to know how to make significant financial decisions their first go around, such as financing education or buying a home. When mortgage companies are creating, managing, or planning content, they must consider these cultural differences in terms of financial literacy. In other words, do not assume Latino clients (or other immigrant groups) understand concepts that many Americans take for granted, such as the value of building credit, the option to purchase homes with no money down and the importance of gaining pre-approval.

Instead of assuming Hispanics are familiar with these financial areas, strive to deliver culturally aware messaging that explains the steps to buy a home and clearly spells out the solutions you are providing. As an example, when we launched the Spanish version of The Federal Savings Bank’s website, we built it from the ground up, selecting the words, content and even imagery that we believe are most likely to connect with Latinos based on their understanding of the homebuying process. We also launched a mortgage application in Spanish, so that all Latino borrowers can take the first step to the process of home ownership.

Proactively offer relevant solutions — Buying a home is a complex process, and for people who are the first in their family to be able to achieve home ownership, it can feel like a daunting process. Hispanics may even incorrectly believe their circumstances prevent them from owning a home. These can include not having a social security number (even if they were legally admitted to the U.S.), not having money for a down payment, and requiring multiple borrowers on loans. Instead of expecting Latinos to explain these sensitive situations to you, consider communicating solutions at the outset, such as no-money-down governmentbacked loans, alternatives to SSNs such as ITIN loans, and the ability to include multiple borrowers on loans.

Showcase your — or your team’s — diversity — According to NAHREP’s 2021 Latino Buyers Survey of topproducing Latino real estate agents, 60% reported that more than half of their buyer transactions were made to Latinos. While care should be taken to prevent sweeping generalizations, this suggests that at least some prefer to work with people who are similar to them.

Indeed, Hispanic loan officers should celebrate (read: shout) their Hispanic heritage. If that does not reflect your background, think about how you can communicate your organization’s diversity, and if you’re still lacking in that department, consider recruiting more. At The Federal Savings Bank, our President Javier Ubarri is Hispanic, and even though we have a sizable base of Hispanic employees, bankers, and leaders, we’re constantly looking to hire more Latino talent.

LATINO HOMEBUYERS: LOOKING AHEAD

I recently heard about a Hispanic borrower whose story surprised me — even as a Latina, multicultural expert, and industry insider. A foreign-born owner of a landscaping company, who does not speak English, recently purchased a couple of investment homes in The Hamptons. While these houses were not mega-mansions reserved for the ultra-wealthy, they are still in one of the priciest zip codes in the U.S., and, to me, represent the dynamism and polylithic nature of the Hispanic market.

Higher-income Latinos are growing — so be prepared! In fact, Hispanics earning more than $100,000 per year are growing faster than any other segment, and in the next five years, affluent Hispanic households will grow 36 percent annually.

In addition to purchasing more expensive residences, Latinos are increasingly investing in real estate, creating more opportunities for mortgage loan officers. Compared to some investment vehicles, such as stocks, Hispanics favor real estate because it is tangible, an investment they can see and feel. In fact, 68% of top producers from NAHREP’s survey already saw an increase in investment property ownership among Latinos last year.

Ironically, perhaps the most significant takeaway about this increasing base of higher-income Latinos has nothing to do with marketing. Rather, loan officers must truly listen to their prospective clients to understand their needs and goals — whether those are buying a first home or purchasing investment properties to build generational wealth. It is only through listening that you can offer customized solutions, demonstrate your empathy and maximize your value to customers. n