Rethink Everything About Educating Consumers on Homeownership

To celebrate National Homeownership Month 2024, mortgage industry experts are providing insights on homeownership trends and research, practical content to adapt to your marketing strategy, and actionable advice for creating social media content to connect with prospective homebuyers.

National Homeownership Month: Addressing Renters’ Concerns and Providing Homebuying Confidence
Jeffrey Walker, CEO and Co-Founder, CredEvolv

3 Ways Social Media Can Provide Mortgage Education
Doug Wilber, Chief Strategy Officer, Capacity

The Hidden Costs of Homeownership
Brian Vieaux, President and COO, FinLocker

Guiding Homebuyers: Understanding Credit Inquiries
Sue Buswell, Credit and Score Consultant #sueknowsthescore

From Renting to Homeownership: Addressing the Emotional Journey of First-Time Home Buyers
Jeremy Potter, President, titleLOOK

How to Help Your Home Buyer Get Credit Ready
Sue Buswell, Credit and Score Consultant #sueknowsthescore

The Future Looks Bright for Homeowners and the Next Gen Loan Officer
John Jurkovich, Founder of The Mortgage Broker Builder

Making Your Home Buying Simple & Reaping the Benefits
April Bowman, Sr Sales Recruiter, Axia Home Loans

 View all previous articles

National Homeownership Month: Addressing Renters’ Concerns and Providing Homebuying Confidence

Jeffrey Walker, CEO and Co-Founder, CredEvolv

Just in time for National Homeownership Month, hot off the press is the Bank of America Homebuyer Insights Report. The report paints a hopeful, albeit anxious, outlook for renters and prospective homebuyers. Critically, the report draws this conclusion helpful for Loan Officers: Many prospective homebuyers fear the long-term consequences of renting, including 70% who feel they’re not making a long-term investment in their future, and 72% who worry that rent increases could affect their finances.

The report comprises two important dynamics, 1) it focuses on the emotional value of owning vs. renting (LO awareness) and 2) it reiterates that renters lack confidence and want to avoid mistakes related to home buying (LO toolkit).

Let’s break the findings down in more detail, as previous FinTalk articles have addressed many of these with practical ways to guide consumers.

The Emotional Value of Owning vs. Renting

Overwhelmingly, renters and prospective homebuyers view homeownership positively. For example:

• 89% of homeowners said the idea of owning a home brings emotional fulfillment rather than added stress.
• 67% of prospective homebuyers would prefer to own a home for the sense of permanence and emotional stability it provides, rather than the flexibility of renting.
• 58% of prospective homebuyers said that owning a home is the best long-term decision for them to have control over their own living space.

Lacking Confidence and Avoiding Mistakes

Here’s where I believe smart LO’s can use the report to their advantage, differentiating themselves from competitors by proactively addressing these three primary concerns:

• 41% are not confident in their understanding of how to finance or secure a mortgage.
• 41% are not confident in their understanding of interest rates.
• 39% are not confident they understand homebuying terminology.

Finally, Matt Vernon, Head of Consumer Lending at BoA, sums up the findings perfectly, “Given the highly competitive home buying market, renters are unsure whether now is the right time to buy. That said, our research continues to show that the vast majority of prospective homebuyers feel buying a home, now or in the future, is the best decision for them in the long term.”

I hope that provides some helpful insight and reinforces that the long-term outlook for home buying among renters is quite bullish, and Happy National Homeownership Month!

3 Ways Social Media Can Provide Mortgage Education

Doug Wilber, Chief Strategy Officer, Capacity

As mortgage rates remain high and inventory low, many families are facing tough housing and mortgage questions that they are not sure how to answer. While your team may hang on every rate update from the Fed, today’s buyers are confused and feeling gloomy.

Reality check: financial literacy rates remain startlingly low and most Americans think it is a bad time to buy a house.

Providing financial education has always been a core purpose of lenders, but today’s market has made financial and mortgage education more important than ever.

Financial professionals have an obligation to educate their customers, and today, social media is one of the most effective ways to do so. Luckily, social media-driven education already aligns with consumer preferences:  Pew Research Center reports  that more than half of U.S. adults get their news from social media, and 79% Millennials or Gen Zers have gotten financial advice from social media.

Many lenders are already capitalizing on this by using social media to connect with their customers and communities, but there’s still ample opportunity to provide financial education to current and prospective homebuyers. Here are three tips:

1. Curate Relevant and Trustworthy News

Social media is flooded with misinformation and misleading data, and your audience members know this. To become a trusted source, be highly selective in choosing accurate, useful and relevant news to post on your branded social media pages and your loan officers’ pages. You can take several steps to ensure that the information you share comes from trusted sources before distributing it to your followers.

Established news organizations seem easy enough to identify, but be wary of illegitimate sites trying to mimic them. The source’s domain and URL will help you identify whether the reference is credible. For instance, sites with URLs that end in “.com.co” might be cause for concern.

It’s also important to be aware of news bias and how it impacts your ability to build a healthy news diet that protects your brand reputation. Seek out resources (like this one) that help visualize where certain media outlets fall on the political spectrum. Armed with this information, you can avoid bias or political commentary. You can also be sure you’re not resharing information that’s deceiving, one-sided, or untrustworthy.

2. Emphasize Your Team’s Thought Leadership

Credible news updates draw in social media users searching for mortgage news, but rather than simply sharing links, weave in original insights to make the information more digestible and jargon-free. Remember: Your loan officers are financial experts, so empower them to share their knowledge through a strong social selling strategy.

In doing so, you’ll not only educate your followers, but also humanize your brand and build trust with your audience. After all, people trust people more than brands, and research bears this out:  Nearly three-fourths  of social media users say they are more heavily persuaded by posts shared from employees rather than brand pages. Engage team members to share their knowledge in original content like social media posts and short videos.

3. Be Engaged

Social media is a two-way communication channel. To make the most of your social media presence, your team needs to be engaged and respond to questions, comments and concerns in a timely manner. Stay connected with your followers and you’ll build stronger, more meaningful relationships within your community in the long term.

Financial literacy is an acute need. By using social media to educate current and prospective buyers, lenders can improve financial literacy, be a good steward for their community and serve as a trusted source of information.

The Hidden Costs of Homeownership

Brian Vieaux, President & COO, FinLocker

Every month should be dedicated to homeownership, but June is recognized this way. This is a great month for loan officers and any lender to promote the value and importance of homeownership.

One crucial aspect to emphasize is the significant difference in personal net worth growth between homeowners and renters. For prospective homebuyers, it’s essential to highlight the lifestyle and financial advantages of homeownership, particularly its potential to enhance personal and family net worth.

It’s also a prime opportunity to educate first-time homebuyers on the total cost of homeownership. Too often, we focus on saving for a down payment and closing costs, and paying down debt to qualify for a mortgage. It’s equally important to understand the financial responsibilities that come with owning a home. This information is beneficial not only for first-time homebuyers but also for existing homeowners considering a move.

The Hidden Costs of Homeownership Study from Bankrate has revealed that costs for property taxes, home insurance, utilities and home maintenance have increased significantly over the past four years. The typical homeowner now spends $18,118 per year to own and maintain a single-family home, which is an additional $1,510 per month on top of their mortgage payment. However, another survey identified that only 24% of American homeowners have set aside money for repairs and maintenance on their homes, leaving 66% vulnerable to taking on additional debt to cover the costs of unexpected home repairs.

Here is an opportunity to be real with consumers and share from your personal experience what expenses they may not know to consider when buying a home. Check out the two surveys I linked above to get state-specific stats for geographical marketing.

Create social media posts to cover each expense, such as property taxes, homeowners insurance, and utilities, and the importance of maintaining a separate home savings account to cover emergency repairs, like water heaters, furnaces, air conditioners, roofs and windows. Homebuyers should also be prepared for the other expenses that are part of homeownership, including general home and garden maintenance.

So, I recommend loan officers use June to share not just the benefits of homeownership but also how people need to plan to be financially prepared for all of the expenses related to homeownership.

Guiding Homebuyers: Understanding Credit Inquiries

Sue Buswell, Credit & Score Consultant #sueknowsthescore

As a Loan Officer, you’re the go-to person for homebuyers with questions about credit. Helping them early on builds trust that lasts. Let’s talk about one common worry: “Will pulling my credit lower my score?”

The Simple Answer

No, it won’t! Now for the why and how.

Understanding Mortgage Credit Scores

When it’s time to check credit during the home buying process, we do a “hard credit pull.” People worry this will hurt their score, but there are rules in place to protect them:

1. First 30 Days: No Impact – The first time we check your credit, it’s ignored for 30 days. Think of it like a free pass.
2. Grouping Inquiries Together – After those 30 days, if you have more credit checks for a mortgage, they get grouped together and count as one. This is called the “de-duplication process.”

Different Rules for Different Credit Bureaus

The three main credit bureaus – TransUnion, Equifax, and Experian – each handle this process slightly differently:

• TransUnion and Equifax: They group inquiries over 45 days.
• Experian: It groups them over 14 days.

So, if you get several credit checks within these time frames, they only count as one.

What This Means for Your Homebuyers

For the first 30 days after we check your credit, it doesn’t affect your score. And even if you have multiple checks after that, they’re counted as one within those special time periods.

Extra Care with Soft Pulls

For those who are extra cautious, we can use a “soft pull” to check credit without affecting the score at all. This way, we can answer credit questions and guide them towards homeownership without worry.

Keep Being a Resource

Remember, your knowledge and support help homebuyers feel confident and informed. Stay ready to answer their questions and support their journey to owning a home.

From Renting to Homeownership: Addressing the Emotional Journey of First-Time Home Buyers

Jeremy Potter, President, titleLOOK

Homeownership is complex. Many articles this month, June being National Homeownership Month, will discuss myriad obstacles for first-time home buyers. The greatest hits are rising or high interest rates, difficulty saving for a down payment, lack of inventory, and the failure of income-earning potential to keep up with rising home prices. Following the parade of horribles, there is the inevitable laundry list of reasons why homeownership is worth overcoming those barriers. While the list is (inevitably) all true and important reasons, the reality is changing, and so must our approach to connect with today’s first-time home buyers.

A growing belief is that renting is better than homeownership. Homeownership is harder than ever at a time when first-time home buyers who were teenagers during the 2008 global financial crisis are evaluating their own critical financial decisions. Those stories will have a big influence on everything from how members of the media cover homeownership to whether traditional buyer demand remains strong. The emotional decision to buy a home is about more than just the market or “settling down.”

Herein lies the complexity. Arguments for the financial merits reiterate the past and potentially evoke skepticism around homeownership. Homeownership has never been a purely financial equation. It has always been an emotional choice about people, place, and life. It’s a big concept, to be sure, but one we’ve aligned with the financial benefits to make it powerful. This month, it is time to return to the fundamentals of home.

Homeownership combines the monthly housing payment with the life we want to lead.

Putting a price on that life would seem odd. We do not typically conflate the two because we’re so often focused simply on funding and getting the job done. Our marketing is to referral partners. Our service, then, to the homeowner is to avoid delays and avoid mistakes. Our deference in the mortgage industry has been to allow real estate agents to own the American Dream. Until now…

The data shows that more and more first-time home buyers are beginning with financing to better understand buying power. Combined with the ease and access of searching home listings online, it makes sense that tech-savvy renters are putting two and two together in today’s market. We do not know what ripple effects this might have and also it unlocks future opportunities to step into the role of full-fledged home finance advisor.

In that role, the best advice for a renter exploring homeownership this month is to live the life you wanna live. Of course, it is a life you have to be able to afford. This is true for all of us. What is also true is that we are so deep in mortgage & real estate that it can be easy to forget the value storytelling plays in our products & services. Fundamentally, it is about their story. I know. Is there anything more complex than that? This is easily what makes it so valuable, too.

This month is not just about the facts and figures that make mortgage make sense. It is about listening to, celebrating and serving the life story of those who come to us for better understanding. When renters reach out to ask about financing, especially those researching their options, mortgage experts get to help write their story. For most first-time home buyers, all the financial reasons for owning a home are actually secondary to the emotional choices. Perhaps this has always been true, as with most (all?) sales processes, and yet now we have to return to the story. As a matter of fact, it will work no matter what happens with rates or inventory. Every version of the story until they find the right one. In that sense, it is actually really simple.

How to Help Your Home Buyer Get Credit Ready

Sue Buswell, Credit & Score Consultant #sueknowsthescore

A potential home buyer has many considerations – Single family? Condo? Townhome?

How many beds/baths?

Garage, covered or off street parking?

Big yard or no maintenance?

Or maybe they’re already convinced of what they want but they don’t know where to start.

As a Mortgage Lender, the first thing you’ll do is pull your client’s credit report.

So that must be where you direct your client to start, and that direction needs to start before the client has selected their dream home.

Waiting until your buyer has selected a home to begin the credit journey often results in unforeseen credit issues – balance to limit issues on credit cards that are not only impacting the score but could impact DTI.

Unpaid collections or other items that once ‘corrected’ will have a negative impact on their score and loan approval.

As a next gen loan officer you have a unique opportunity to help your client begin their credit journey much earlier than at home selection, but to do that, you must know how to guide them.

If they’ve not been monitoring their credit, there are multiple free options for them to keep an eye on their credit from their credit card or bank/credit union.

Help them understand what creditors are reporting with free weekly reports from www.annualcreditreport.com.

www.myfico.com provides them with a monitoring option for $29.95 month that includes the scores that you as a mortgage lender use today FICO 2, 4 and 5. And this site will not produce a trigger lead nor would the report/data be portable to a mortgage lender.

Additionally, as a mortgage lender you have access to financial applications that can assist your buyer in understanding their credit.

As a next gen loan officer, you know that the higher the score, the better their options for approval, loan amount, and more. Being a part of the home buyers credit process early on creates a proactive journey towards not just a home, but a home that is more affordable because they maximized their credit score – with your guidance.

The Future Looks Bright for Homeowners and the Next Gen Loan Officer

John Jurkovich, Founder, The Mortgage Broker Builder CEO1440

June is National Homeownership Month, and it’s a perfect time to talk about why owning a home is a smart financial move. If you’re renting or thinking about buying your first home, you might be wondering about the benefits of homeownership and how to get started. This article will help you understand the financial perks of owning a home and why now might be the best time to buy if you want to see big gains in the future.

The Financial Benefits of Homeownership

Owning a home can be a great investment. Here are some reasons why:

1. Building Equity: When you own a home, you build equity. Equity is the difference between what your home is worth and what you owe on your mortgage. As you pay off your mortgage, your equity grows. For example, if you buy a home for $500,000 and pay off $100,000 of your mortgage, and your home value increases to $600,000, you now have $200,000 in equity. Remember, you were going to pay rent anyway.
2. Home Value Appreciation: Home values tend to increase over time. On average, home prices have gone up about 5% per year over the last 20 years, and that would be significantly higher if not for the Great Recession. Shant Banosian recently posted this on Instagram that most people buy and live in their homes for at least 10 years. Since 1942, if you bought a home and held it for 10 years, you would have only lost money one year—if you bought a home in 2006. This shows that holding onto a home long-term generally leads to positive financial outcomes, making homeownership a reliable investment. Home values have increased in 77 of the 82 years since 1942.
3. Tax Benefits: Homeowners can save money on taxes. You can usually deduct mortgage interest and property taxes from your income taxes. Plus, if you’re married and sell your home, you can exclude up to $500,000 of the profit from capital gains taxes.

Example of Home Appreciation

Let’s look at an example of how home appreciation can work in your favor:

• Home Purchase Price: $500,000
• Appreciation Rate: Doubling over 10 years (about 7.18% per year)

After 10 years, the home value doubles:

• Future Home Value: $1,000,000

If you sell your home, you have:

• Home Equity Gain: $1,000,000 (future value) – $500,000 (initial investment) = $500,000

Tax Implications: As a married couple, you can exclude up to $500,000 of capital gains from taxes if the home is your primary residence, so you pay zero taxes on this gain. Unlike many other investments, such as a traditional 401K, where you contribute pre-taxed but have no idea how much or at what rate you will be taxed when you need to use the money in the future.

First-Time Homebuyers

Understanding the local market, schools, and community amenities is crucial to making an informed decision when buying a home. In a recent discussion with a former mortgage executive, they shared some data from looking at thousands of closed purchase clients and hundreds of thousands of internet mortgage leads. They found that almost 75% of leads were from first-time homebuyers, but less than 25% of closings came from them. This suggests that local experts are winning those deals for first-time buyers. First-time buyers made up 32% of all home buyers in 2023, an increase from 26% the previous year. This statistic highlights the growing interest in homeownership among first-time buyers and underscores the importance of being well-prepared and knowledgeable about the home-buying process (Source: National Association of Realtors).

Here are some pro tips that are working right now:

• The Local Market Expert: Know the ins and outs of the area, including schools and local amenities, and even where to get a gluten-free ribeye.
• Engage with the Community: Be active on social media and participate in the community both online and in person. Position yourself as a trusted expert and be personable. Be the brand.
• Win with Your Referral Partners: Collaborate with agents and focus on helping them make more money. The theory of reciprocity suggests you will make more too.
• Review, Reviews, Reviews: Make sure you have positive reviews on Google and every platform where a client might find you. Your reputation matters.
• Offer Unique Tools and Services: Provide value to clients early in their journey with tools like FinLocker, first-time buyer courses, and other services that set you apart.
• Build Relationships: The home-buying process can be stressful. Clients prefer working with someone they trust. Make an effort to connect personally and professionally.
• Social Proof: Go to your closings, take pictures, and share stories of your clients winning with you.

To succeed, ensure people know who you are, have something unique to offer, and use systems that add value and can guide clients through their home-buying journey over 6-12 months.

Why Homeowners Can Expect Big Gains in the Next 5 Years

The housing market is looking good for homeowners. Here are a few reasons why:

1.  Limited Supply of New Homes: Not as many new homes are being built, which means there’s less supply. When supply is low and demand is high, home prices go up. Government data released Thursday showed that housing starts slid by 5.5% last month, coming in at a 1.28 million annualized rate, with building permits – a key gauge of future construction – dropping by 3.8%.
2. Strong Demand: More people want to buy homes. Between the formation of new households and immigration, we are running a deficit of almost a million homes a year, leaving 1 in 3 potential home buyers without a home to purchase.
3. Interest Rates: If and when rates come down in the future, it could create a spree of activity similar to the Covid boom, where those who buy today may see massive increases in values and a chance to possibly save some money through a refinance as a bonus.
4. Inflation: Real estate is a good way to protect against inflation. As prices of goods and services increase, so does the value of real estate.

Owning a home has many financial benefits, from building equity to tax savings. In the mortgage business, we help people achieve the American Dream of homeownership. With the current market conditions, homeowners can expect significant gains over the next five years and become advocates for you. As long as people are renting or thinking about buying a home, there will be plenty of opportunities to help people on their homeownership journey. Homes will never be less expensive than they are right now, and it will never be easier than it is right now to build your brand and stand out from the pack. There are many ways to move forward and only one way to stay the same. The future looks bright for homeowners and the next generation of loan officers.

Making Your Home Buying Simple & Reaping the Benefits

 April Bowman, Sr Sales Recruiter, Axia Home Loans

Benefits to homeownership are plentiful. As we know the rates are making it more difficult for some, however if we look back historically, the rates today are not bad. I bought my first house in the early 1990’s and I paid 8% interest, and at the time it was a great rate. So many of our feelings regarding rate are skewed from the more recent years at 2.5-4% rates. So, in my opinion, we need to keep home ownership affordable for ourselves with special programs for buyers and saving a down payment, however, realize once your finances are in order that waiting on the perfect rate will not get you the equity that you will start building or the tax benefits you will get.

Investing in a home also helps you build stability and community in your family. You start interacting with your neighbors at the community parks and pools. You build strong relationships with other families that are putting down roots and purchasing a home near you.

There are several steps in starting the homeownership process according to Forbes. Eight Steps To Homeownership: What To Expect At Every Stage Of The Process.

1. Take a Deep Dive into your finances, pay off what you are able and don’t make any large purchases during this process. Consider how much savings you have for downpayment and loan costs.

2. Contacting a Real Estate Agent, interview them for a good fit for you and your family.

3. Get pre-approved with a lender, it is a good idea to interview your loan officer as well. You want to trust them and have communication through the process. Be sure and ask about Down Payment Assistant programs if you are a first-time buyer.

4. House Hunting is the fun part. Know what you want, regarding space, garages, location, number of bedrooms and bathrooms, etc.

5. Think about location and neighborhoods for schools and shopping. Location is also important for resale later.

6. Offer time! This can be stressful these days with multiple offers coming in, I believe leaning on your agent and having your finances figured out will make this time go more smoothly.

7. Escrow: Congratulations by this time your offer has been accepted. An appraisal may be needed as well as an inspection to make sure the house is everything it seems to be without surprises.

8. Closing Day! Yay! It’s time to get your keys and start living the dream.