The proposed first-time homebuyer down payment assistance bill is a step in the right direction to help break the cycle of families renting generation after generation and put them in a better position to start creating personal wealth they can pass to the next generation.
However, these first-time homebuyers are going to need professional tools and advisors to cross the finishing line. Not only will these first-time homebuyers need to overcome the typical first-time homebuyer hurdles of saving for their closing costs and having a good credit score and credit history to qualify for a home loan, but they will also need to be educated on the mortgage process and homeownership responsibilities.
In surveying NextGen buyers for its 2020 NextGen Homebuyer report, Cultural Outreach found childhood financial education is a better predictor of homeownership than parents’ household income. NextGen homebuyers that grew up learning how to make a budget are 2.5 times more likely to have an emergency fund saved, and 78% have 3 months of emergency funds saved. As the parents of this group of potential homebuyers have also not been homeowners, it’s quite likely that they were also not provided with financial education.
The survey found that 81% of NextGen buyers turned to friends and family for advice during the buying process, so originators should prepare to be a trusted advisor from the time these consumers are identified to help them prepare for mortgage qualification all the way through the home buying process, and beyond.
That’s quite a tall ask for many originators as homebuyers are often seen as one-off transactions. Fortunately, FinLocker is in a position to help originators help these consumers now, so they’ll be in a better financial position to take advantage of the down payment assistance bill when it gets passed.
The FinLocker app provides tools to help consumers manage their finances, see where they’re spending their income, and get in the habit of budgeting their income so they can start saving for their costs to close. After closing, they continue using the app to save for ongoing homeownership costs, such as maintenance, home insurance, and property tax. Potential homebuyers will also receive their credit score and credit report and learn how to improve their score and credit history. Additional educational resources on the mortgage process, credit card management, insurance, and homeownership, will relieve the burden on the originator of being a full-time financial advisor.
If you would like to get a head start on attracting a new generation of first-time homebuyers to your pipeline, contact Brian to show you how FinLocker can help make it easier for you and your homebuyers get mortgage ready.