Every leading actor has a supporting cast that makes their job a little easier, allows them to shine a little brighter and enhances their big moments in the spotlight. While mortgages may not be as glamorous as the lights of Hollywood, co-borrowers – or co-stars – can be integral to many loan applications and should not be overlooked.
ATTOM Data Solutions recently released its U.S. Residential Property Loan Origination Report for the second quarter of 2017, which shows that more than two million loans were originated on U.S. residential properties during this quarter. This is up 27 percent from a three-year low in the first quarter of this year! This is great news, but the detail that should not be overlooked is the role co-borrowers played in the successful completion of many of these loans.
Co-borrowers were involved in nearly 23 percent of all purchase loan originations on single-family homes in the second quarter. These co-borrowers are classified as multiple, non-married borrowers who are listed on the mortgage or deed of trust. This number is up from 21.3 percent in the previous quarter and up from 20.5 percent in the second quarter of 2016.
“Homebuyers are increasingly relying on co-borrowers to help with home purchases, particularly in high-priced markets where sizable down payments are necessary to compete,” said Daren Blomquist, senior vice president at ATTOM Data Solutions. “This rising trend in co-borrowing is helping to eke out increases in purchase loan originations despite affordability and supply constraints.”
THE COASTS LEAD THE WAY
This trend is particularly popular in San Jose, Calif. (50.9 percent of all loans closed within the second quarter involved co-borrowers); Miami (45.2 percent); Seattle (39.1 percent); Los Angeles (31.1 percent); San Diego (29.4 percent); and Portland, Ore. (28.8 percent). Much of this activity stems from higher home prices and Millennials utilizing their parents’ credit to qualify for a purchase. Some Millennials (and other demographics) are also opting to co-habituate even if they delay or decide against marriage. Regardless of their marital status, many Millennials still see homeownership as a wise investment in their current and future living situations, particularly when you factor in the rising rents occurring in many markets.
This is a good reminder that your focus, hospitality and bedside manner should not just extend to your target audience or to the singular person who reaches out to you, but to their intimate network as well. Many of our loved ones carry influence over the decisions we make. Some of this influence occurs because they care about our well-being and want to see us achieve happiness and success. Another portion of it may be based in experience, as the older, wiser mentors in our lives may have some insight into what is and is not the best course of action for us. And a third section of that influence occurs because the decisions one individual makes can have a large impact on the lives of those around them.
Whatever the case, it is never a good idea to view a potential borrower as a one-(wo)man band. Chances are very high he has an intimate team of people behind him who may factor into decisions like homeownership for both direct and indirect reasons. Play to a potential client’s entire network when possible, and watch it yield much larger results.