jlink
Thursday, July 18, 2019

One night my son started to ask some fascinating and thought-provoking topics around the dinner table that he and his friends compiled. Of the many engaging questions, one intrigued me the most, and I started to query my own friends and network, wondering how they would respond. The question was, “Would you rather have $1 million guaranteed, or a 75% chance at $10 million?”

It was interesting to see the different responses and conversations that unfolded as a result. I then took the challenge to social media, and posted the question on my account, polling the audience for their response. The final tally showed that 60% of the responders choose the 75% chance at $10 million, over the guaranteed $1 million. When I analyzed the data a little further, I realized that predominately, the people who choose the “chance” at $10 million were under the age of 30. It seems, younger aged people are willing to take a chance at a bigger and better opportunity, than a substantially smaller, guaranteed thing.

As I thought about it further, and moments before the article deadline, I realized that often the same decisions play out in my profession as well. I find that the younger generation (and I am not sure when I graduated from there, but it came suddenly), predominantly chooses the uncertainty and risk of “better” results over the assurances and guarantees that I place before them.

It’s not just how the younger generation is endlessly “shopping” for the “best rate,” because I think that is important, and something that should be explored. The risk in the mortgage-world can be with something as simple as the competence of the loan officer, the experience and expertise of a sensitive situation, or the assurances that the loan or closing will happen promptly. I find, like never before, in hunt of “the best deal,” so many things are being neglected and compromised along the way.

In fact, a recent study not only supports my theory but also very much speaks to the essence of the disconnect. A recent extensive survey by Zillow revealed that “Millennials” (those born between 1981-1996; 22-37 years old) had the highest “shopping rate” amongst all other age groups, as they contacted an average of 2.8 mortgage companies before making a decision. The other groups averaged about 1.6 inquiries before making their final mortgage decision.

Clearly, the millennials are “doing their homework” … yet, as the research revealed, nearly two-thirds of those same millennials have the biggest “regrets when it comes to their home purchase” and mortgage decision! Factors of frustration and regret included, “rushing into the process without evaluating all the options,” “mortgage payments are too high,” “interest rate too high,” and “the type of mortgage” they obtained.

The limit of space and time prevents me from really explaining what I think is going on. Without question, my analysis is, that despite their extensive research and due-diligence, millennials are being persuaded by inaccurate and misleading options, which are ostensibly better. They are willing to take a calculated risk, but the “better outcome.” In the end, either through negligence or misunderstanding, they are often left with worse results and terms, when it’s too late to do anything about it. Shout out and happy birthday to Annekee Brahver-Keely, Howie Bromberg, and Dov Erdfarb.

By Shmuel Shayowitz


Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker, and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]