Diana Mulhall

Providing Borrowers With A Personalized Homebuying Experience

Borrowers come to you at all levels of financial preparedness.

First-time homebuyers often have student loan debt, an average credit score, a high DTI, and not enough savings to cover their down payment and closing costs. How do you get each borrower mortgage-ready without putting pressure on your already strained internal resources?

Applications from past clients looking to refinance or purchase a new property are not guaranteed to be easy to close, either. They can return to you with their finances in a different shape – a lower credit score, high credit card utilization – to what they were when you financed their last home purchased.

Fintech is making it easier and affordable for lenders to provide a customer-centric mortgage process that adjusts to each borrower’s timeline enabling them to personalize their homebuying experience.

Select the right solution, and you’ll have the opportunity to create customers for life by nurturing each borrower through whichever cycle of life they are in when they contact you.

What’s more, if you do it right, you’ll create evangelical brand loyalists, and referrals to their family, friends, and neighbors will follow. Most consumers buy or refinance a home every five years, so you can’t build your pipeline for the next two years on retention.

Almost half of the consumers only consider one mortgage lender before deciding where to apply. To build a profitable pipeline, you should aim to provide a home financing experience that garners recommendations from each borrower. Borrowers who you helped overcome credit or debt challenges on their way to mortgage readiness will be more inclined to promote your business.

FinLocker not only had the tools and resources to get your borrowers mortgage-ready at their own pace, but it’s also a brand loyalty driver. White-labeling your FinLocker will keep you top-of-mind with every login so that you’ll be the only lender your borrowers will want to recommend and return to for future financing.

How To Profit From Giving Borrowers A Personalized Homebuying Experience

Borrowers come to you at all levels of financial preparedness.

First-time homebuyers often have student loan debt, an average credit score, a high DTI, and not enough savings to cover their down payment and closing costs. How are you getting each borrower mortgage-ready without putting pressure on your already strained internal resources? Or do you decide to pick off the easy-to-close applications and ignore your long-term pipeline?

Applications from past clients looking to refinance or purchase a new property are not guaranteed to be easy to close, either. They can return to you with their finances in a different shape to what they were when you financed their last home purchased.

Fintech is making it easier and affordable for lenders to provide a customer-centric mortgage process that adjusts to each borrower’s timeline enabling them to personalize their homebuying experience.

Select the right solution, and you’ll have the opportunity to create customers for life by nurturing each borrower through whichever cycle of life they are in when they contact you.

What’s more, if you do it right, you’ll create evangelical brand loyalists, and referrals to their family, friends, and neighbors will follow. Most consumers buy or refinance a home every five years, so you can’t build your pipeline for the next two years on retention.

Almost half of the consumers only consider one mortgage lender before deciding where to apply. To build a profitable pipeline, you should aim to provide a home financing experience that garners recommendations from each borrower. Borrowers who you helped overcome credit or debt challenges on their way to mortgage readiness will be more inclined to promote your business.

FinLocker not only had the tools and resources to get your borrowers mortgage-ready at their own pace, but it’s also a brand loyalty driver. White-labeling your FinLocker will keep you top-of-mind with every login so that you’ll be the only lender your borrowers will want to recommend and return to for future financing.

How Consumer-Permissioned Data Provides Consumers With Extra Protection During Financial Transactions

Consumer-permissioned data puts the consumer in control of what transactional data they share with a lender, insurance company, other financial institutions, or service providers.

What is Consumer-Permissioned Data?

Consumer-permissioned data is personal transactional data that a consumer grants permission for a business to access on their behalf. Examples include online banking or bank transaction data such as checking, savings, and investments.

The consumer provides permission to the lender to securely access the data on their behalf by entering their username, password, or other authentication credentials directly into the lender’s online application or loan processing portal themselves.

Benefits of Using Consumer-Permissioned Data in the Lending Process

At first glance, the idea of giving a lender access to their personal and financial information might make a consumer cringe. The reality is that consumer-permissioned data will protect a consumer’s information during the lender process significantly more than faxing, emailing, and mailing their personal and financial documents.

Consumer-permissioned data is a win-win for consumers and lenders. Consumers don’t need to track down, copy or print hard copies of bank statements and W-2s for insistence.

Instead, the consumer gives a lender electronic access to retrieve specific financial data from their financial accounts, which they need for a lending decision. This process helps prevent repeated requests for information as emails and printed documents that can be accidentally deleted or lost due to human error during the application process. Having all personal and financial information provided electronically gives the lender the ability to make faster, more accurate decisions.

Establishing Trust Drives Business

Empowering consumers to control what data they share, when they share it, and to whom they share it establishes an additional layer of trust between the consumer and lender. When consumers are convinced an organization is protecting their personal data, 40% of consumers increase their transactions, 39% increase spending, and 49% go on to tell friends and family about their positive experience with an organization, according to Capgemini.

How FinLocker Empowers Consumers With Consumer-Permissioned Data

FinLocker uses consumer-permissioned data to provide consumers with an extra layer of protection when deciding to share their personal and financial documents with their lender for a mortgage application. The process puts consumers in the driver’s seat, providing consumers with an accurate and seamless way to securely transfer documents to their lender.

A FinLocker user can upload their personal and financial documents to their FinLocker account at any point along their journey towards mortgage readiness. When the consumer is ready to proceed with their mortgage application, they select which documents they want to share electronically with their lender. They can also decide to provide their lender with access to other financial data by signing in to their financial accounts using secure consumer-permissioned data protocols.

The trust built between consumer and lender during the entire journey to mortgage readiness using FinLocker culminates in the consumer-permissioned data transfer to provide a seamless mortgage application process.

10 Ways To Save For A Down Payment On A Home

Saving for a down payment is one of the major hurdles most first-time homebuyers face on their journey towards homeownership. However, with a clear savings goal, a solid savings plan, and adopting a few savings strategies, you’ll be well on your way to saving for your first home.

1 – Start with a clear savings goal

Start by calculating how much you will need for your down payment and closings costs. FinLocker users can use the Home Affordability calculator, which will estimate a total home budget based on your income, and display the minimum down payment for a Conventional (3%), FHA (3.5%) and VA (0%) home loan, and the estimated closing costs for each loan type.
The example scenarios below are based on a 30-year mortgage term at a 4.25% interest rate.

On a $75,000 annual income you could afford a $265,000 home with a Conventional loan

  • Monthly Payment: $1750.67
  • 3% Down Payment: $7,940.00
  • Est. Closing Costs: $10,587.00
  • Total to Save: $18,527.00

On a $75,000 annual income you could afford a $286,808 home with an FHA loan

  • Monthly Payment: $1937.03
  • 3.5% Down Payment: $10,038.00
  • Est. Closing Costs: $11,472.00
  • Total to Save: $21,510.00

On a $75,000 annual income you could afford a $411,506 home with a VA loan

  • Monthly Payment: $2530.59
  • 0% Down Payment: $00.00
  • Est. Closing Costs: $16,460.00
  • Total to Save: $16,460.00

2 – Create a household budget

1. Write down your bills and regular expenses.

Bills:
• Bills that are the same each month, like rent
• Bills that might change slightly each month, like utilities
• Bills you pay once or twice a year, like car insurance
• Minimum credit card or loan payments. Anything beyond the minimum goes into the savings and debt repayment category.

Regular Expenses
• Food
• Transportation or Gas
• Entertainment, Cable
• Clothes
• Unplanned expenses, like car repairs or medical bills
• Child care or other expenses you need so you can work.

2. Write down how much money you make after tax.
3. Subtract your bills and expenses from how much money you make
4. Review your budget to see what you do not need or how you could spend less.
5. At the start of each month, plan how you will spend the money you earn that month.
6. At the end of the month, see if you spent what you had planned.

3 – Avoid your spending triggers

While you were reviewing your bank account transactions, you may have noticed a few spending habits that you can adjust to find additional savings.
We all have those places or people that make us want to spend a little too much. Maybe it’s a discount department store or auto shop, or the need to upgrade your phone with each new release. Until you’re feeling confident with your budget, limit your contact with those triggers, so you can focus on what you’ve planned to spend in that category. Challenge yourself: Can you resist the temptation to upgrade your phone while you’re saving and working on improving your credit?

4 – Go on a 30-day spending diet

For one month, only make essential purchases: no new clothes, no take-out, no new gadgets or toys. Deposit the money you saved each week into your savings account. At the end of the month, see what areas you can maintain to keep your savings growing.

5 – Think before you shop

Buying something impulsively, can throw your budget out of whack. Instead, give yourself 24 hours before purchasing. You’ll typically wake up the next day a little less excited about that deal, which can help you feel confident about making future buying decisions rationally.

6 – Look for savings before you shop

If you regularly shop at certain stores, you probably know when they offer their best deals, so wait to shop then. Check out your supermarket’s weekly sales so you can plan your shopping list, and stock up on the sale items you regularly use. Save even more at the supermarket with coupons online or in the supermarket’s app.

7 – Adjust your insurance

If you only use your car for local trips, ask your auto insurance company if you can adjust your insurance coverage to save money on your monthly premiums. An independent insurance broker can also find other ways to save, such as increasing your deductible amounts or combining multiple policies with the same provider.

8 – Open a separate savings account

Reduce the temptation to spend the money you’ve been saving by stashing the money in a separate savings account. If you’ve noticed that you can regularly save $100 from each paycheck, ask your employer to set up an automatic deposit for a set amount from each paycheck into this account. Look for a financial institution that pays interest on the savings account.

Additional ways to reach your down payment goal

9 – Tips To Save Some Green While Making Make Your Home Greener
10 – Giving and Receiving Gift Money For A Down Payment

Bringing Financial Wellbeing To The Black Community

In honor of Black History Month, we’ve examined the racial disparity in homeownership and ways for the fintech, finance, and mortgage industries to improve Black Americans’ homeownership rate.

Homeownership is the primary way that American families accumulate wealth. Yet to attain the American Dream, Black Americans must overcome a disproportionate burden of student loan debt, a lower salary to help pay down the student loan debt, a lack of financial education, and inequality in the mortgage process.

The Disproportionate Burden of Student Debt

Student debt is the foremost hurdle facing most first-time homebuyers. It is also the primary reason that delays 76% of consumers from buying their first home. However, the student debt crisis has disproportionately impacted black borrowers and saddled black students with the most debt.

Black Americans borrow money for college at a higher rate than any other group: 86.8% of black students at public four-year colleges borrowed federal loans compared with 65% of Latino students and 65.9% of white students, according to the National Center for Education Statistics.

Black students with bachelor’s degrees owe $7,400 more student debt ($23,400 versus $16,000) on average upon graduation than white graduates, according to Brookings. Differences in interest accrual and graduate school borrowing lead to black graduates holding nearly $53,000 in student loan debt four years after graduation—almost twice as much as their white counterparts.

Black college graduates ages 21 to 24 earn $3.34 less per hour than their white peers, according to MarketWatch, despite holding similar qualifications and experience levels. That $7,000 annual difference negatively impacts their ability to pay down student debt.

Overcoming The Hurdles To Qualify For A Mortgage

Homeownership is often a more financially stable housing option than renting because it allows families to have more predictable housing costs. Yet, most Black families rent their homes, and the homeownership gap between Black and White Americans is growing wider.

The Fair Housing Act was passed in 1968 to open up opportunities for Black Americans to become homeowners by making it illegal to discriminate against any person from buying based on race and other protected classes. It eventually worked, when Black homeownership peaked at 69% in 2004 and 2005. However, numbers dropped following the 2008 housing crisis and haven’t recovered.

In Q3 2020, the percentage of Black Americans owning a home was 46.4%. It is 75.8% for non-Hispanic white alone householders. According to NAREB 2020 State of Housing in Black America, the homeownership rate for Black Americans who graduated from college is only 3.2% higher than that of White high school dropouts.

Lenders deny mortgages for Black applicants at a rate 80% higher than that of White applicants, according to 2020 data from the Home Mortgage Disclosure Act.

Black borrowers who do overcome the hurdles of mortgage qualification often pay higher rates for FHA-backed loans and conventional mortgages. According to the National Association of Real Estate Brokers, Inc. 2020 State of Housing in Black America report, in 2018, 53% of Black mortgage borrowers obtained FHA or VA loans, compared to 23% of White borrowers. Only 5% of the conventional market were loans to Black borrowers, compared to 15% of the FHA/VA market.

Reducing the Gap in Homeownership

To reduce discrimination and improve the homeownership rate for Black Americans, the Urban Institute made these recommendations in its report, Building Black Homeownership Bridges: A Five-Point Framework for Reducing the Racial Homeownership Gap:

  • Improve and expand financial education, housing counseling, and homeownership preparation to renters and younger generations
  • Helping Black renters gain access and understanding of homeownership tools at an earlier age
  • Explore more options for the use of fintech to advance understanding and access to homeownership
  • Encourage savings as money in the bank can alter a borrower’s subsequent probability of default
  • Increase visibility and access to down payment assistance and low-down payment lending programs
  • Expand small-dollar mortgages for purchase and renovation
  • Consider diverse sources of income to qualify for a mortgage
  • Strengthen post-purchase counseling
  • Tools to monitor real-time home values and home equity

Homeownership Can Provide The Black Community With Financial Wellbeing

Homeownership is the primary way that American families accumulate wealth. Wealth, when defined as the difference between what people own and what they owe, provides immediate financial security and long-term economic mobility. During an economic crisis, such as the current pandemic, families with wealth are more likely to have emergency savings to pay their bills if they’ve had their work hours reduced or experienced a permanent job loss.

According to the 2019 Survey of Consumer Finances, the typical White families’ home value is $230,000, yet the typical Black families’ home value is $150,000. Wealth is often passed from one generation to the next, whether through inherited wealth, financial education, or down payment support. Black families have fewer financial opportunities to give their children because the primary asset that drives wealth is difficult to attain and, once achieved, has a lower value, leaving them with less wealth to distribute.

FinLocker provides all users with the tools and educational resources achieve financial stability through homeownership. Putting a transparent, tech-driven financial solution into all consumers’ hands can help address the racial disparity in homeownership and wealth creation.

Here are some organizations that can provide additional resources:

National Association of Minority Mortgage Bankers of America (NAMMBA) – Supports minorities and women who work in the mortgage industry with education and career development. Currently focused on connecting 50,000 college students to positions within the real estate finance industry. #StudentChallenge.

Cultural Outreach – Focused on helping financial institutions and mortgage lenders connect with young and underserved markets. Here’s their Lender Resources.

LoanSense – Identifies federal loan programs and government subsidies to reduce student loan payments. The savings can help the borrower increase their homebuying budget. LoanSense knows how different loan programs handle student debt, so that they can recommend to the referring loan originator the best loan program for their borrower. Use the LoanSense Purchasing Power Tool to see how reducing student loan payments can increase a consumer’s home budget.

FinLocker
Request A Demo