Business Building Center

Adapting Business For 2021

Planning Your Pivot: Learning From 2020 To Prepare For 2021

Many of the mortgage lenders and originators who successfully transformed their business almost overnight in March 2020 had a record year in 2020.

2021 is expected to be another year of change. Now is the time to identify what strategies elevated your business in 2020 and prepare to pivot to 2021.

Will Skype and Zoom meetings replace more of your face-to-face meetings long term?

Did electronic document signing prove popular with your buyers?

Permanently offering both electronic or in-person meetings and document signing to clients will demonstrate that you value their time and understand their preferred communication method.

How will you pivot to grow and nurture your pipeline in 2021? 

Research indicates that many first-time homebuyers still prefer to work with a local lender. But now that younger borrowers are spending even more time online and don’t need to walk into a branch, how will you pivot to generate new leads?

Whether from real estate agents or past clients, referrals have always provided a significant source of an originator’s leads. Social media is an easy way to stay connected with past clients and offers a low-cost solution to attract new leads. How will you pivot your marketing strategy to stay top of mind and nurture the prospective homebuyers while they get mortgage-ready?

Adopt a high tech and high touch approach to pivot your business in 2021.

FinLocker helps originators reduce the friction of mortgage preparation and the mortgage application process for originators by giving borrowers the tools to control their mortgage preparation.

The borrower uses the FinLocker tools to save their down payment and closing costs, reduces debt, and improve their credit. When a borrower is confident they are mortgage-ready, they can take a short readiness assessment inside the app and decide, based on the results, if they meet the qualifications to proceed with their mortgage application and notify their originator of this decision from the app.

FinLocker reduces the friction often associated with document collection because the borrower can securely upload and save their personal and financial documents to the app, then share those documents directly with their lender directly from the app. The information is delivered to the lender as a MISMO file, which can be transferred directly to the originator’s LOS for processing.

Successful mortgage originators are personable, resilient, and creatively adapt to market fluctuations.

To be successful in 2021 and beyond, originators need to provide the younger generations of homebuyers with high tech tools and solutions they need for mortgage prep and complements your personalized communication.

Having A Lion Mindset Helps Millennial Buy First Home

Ethan was typical of many young first-time homebuyers. He had a short credit history, an average credit score and thought the only way to qualify for a mortgage was to have a 20% down payment. What was different about Ethan is that he worked at FinLocker and had the opportunity to create a FinLocker account and use the app’s data and educational resources to carve his own journey to get mortgage-ready.

Like all employees, when Ethan started working at FinLocker, he created his personal FinLocker account to manage his finances. Watching the videos and reading the articles in the educational resources, Ethan soon realized he could achieve his homeownership goal quicker.

Credit score and report monitoring in FinLocker

Understanding the factors that influence a credit score was important to increase his credit score. As a young home buyer, Ethan had not built a credit history. Opening a new credit account has a low impact on how a credit score is calculated, but having almost no credit history is far more negative. A longer credit history demonstrates to a mortgage lender that a borrower can responsibly manage a smaller amount of credit, so they’ll be more inclined to finance a home purchase.

Ethan started to build a credit history by opening his first credit card account. After six months of making regular purchases and paying off the balance in full each month, he opened a second credit card account.

Over the next six months, Ethan paid his existing auto loan and both credit cards on time and kept his credit utilization rate below 30%. These two factors have the highest impact on credit score calculations. Monitoring his credit score in the FinLocker app, Ethan was able to see that his diligence was paying off and his credit score rose by 50+ points.

“When it comes to using credit cards to build credit, try not to buy anything with a credit card that you can’t afford to pay off at the end of each statement period.”

FinLocker has tools to save for down payment

Like many first-time homebuyers, saving for a down payment and closing costs is a significant barrier to home buying. While improving his credit score, Ethan knew he needed the discipline to begin saving, so he created a savings goal for a 5% down payment plus 4% of the expected purchase price for closing costs. After adding his bank accounts, the FinLocker Spending Analyzer categorized his transactions so he could understand his spending habits. He then created detailed budgets to identify areas where he could save from each paycheck.

Opening a separate savings account and automatically depositing a set amount into the account from each paycheck encouraged Ethan to pay all monthly bills on his set budget while still meeting his saving goal. Eight months later, he’d reached his savings goal but had not found a home to buy, so he created a new goal to save for the first six months of mortgage payments.

“The flexibility of the FinLocker app enabled me to create multiple financial goals. Creating the next goal as soon as I had achieved the first helped me to remain focused on always saving a portion of my income with every paycheck.”

 

FinLocker can help determine home affordability

Ethan learned that getting pre-qualified or pre-approved for a mortgage is important before starting a home search, so he contacted a mortgage lender who was a FinLocker client. After getting pre-approved, Ethan entered the number into the FinLocker Affordability Calculator. However, the payments were higher than his Detailed Budget recommended. He adjusted the purchase price in the calculator until he was comfortable with the monthly payments.

 

“Don’t be tempted to buy a home up to the full amount you’ve been pre-approved. I didn’t want to be house poor and committed to a high mortgage payment each month. I also wanted to have money to travel and begin saving for retirement.”

 

Searching for a home in FinLocker

Ethan initially started his home search online but found many homes in his budget were already off the market. Once he had FinLocker, he used the Real Estate Search widget built into the app, which enabled him to save his search criteria, including preferred price, home type, and the number of bedrooms. He also elected to receive notifications when a new home hit the market. When a family member referred him to a local real estate agent, he also searched MLS listings.

“Searching for my home inside the FinLocker app gave me access to a wide variety of homes that met my saved search criteria. I was also able to avoid being bombarded with calls and emails from advertisers, which often happened when I was using other real estate search sites.”

 

Ethan achieves mortgage readiness using FinLocker

Fourteen months after opening his FinLocker account, and monitoring his progress with the Readiness Assessment, Ethan found his first home, a 2-bedroom, 1.5-bathroom condo in a northern suburb of Detroit, Michigan, for $115,000.

Ethan contacted his loan officer directly from the FinLocker app to start the mortgage process. He selected which financial documents he wanted to share for his mortgage application directly from the Share Center inside the app.

“When I got pre-approved, my loan officer gave me a list of financial documents that I would need for my mortgage application, so I had plenty of time to upload them to store in my FinLocker. It was really convenient and much more secure to simply select which documents I wanted to share with my lender to complete my mortgage application, rather than scanning and emailing a bunch of bank statements, W2s, and other documents.”

As the condo needed updating, his loan officer recommended a Fannie HomeStyle loan to finance the purchase price and up to $30,000 for renovations.

After the renovation was complete, Ethan’s home was worth approximately $160,000. With 12.5% equity in his new home, Ethan added his new home to the My Property tab to monitor his home’s value and equity. Ethan has continued using his FinLocker app to budget and save for his next financial goal.

Contact us to schedule a demo to see how the FinLocker app can help your first-time homebuyers get mortgage-ready.

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.

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