Educate Homeowners on the Importance of Maintaining Their Mortgage Readiness
This month, our mortgage and finance experts provide advice for homeowners to maintain their credit and financial health so they can move quickly when the market moves or when their life circumstances requires them to move.
Election Year Strategies to Keep Your Homebuyer Pipeline Motivated & Mortgage Ready
Brian Vieaux, President and COO, FinLocker
Coming Soon: A New Chance for Approval on Loan Denials
Jeremy Potter, Founder, Next Belt Strategies
How to Be the Difference Homebuyers and Homeowners Need Amid Falling Rates
Sue Buswell, Credit and Score Consultant #sueknowsthescore
There’s No Time Like the Present to Work on Your Credit Scores
Steve Ely, CEO of eCredable
Helping Homeowners Stay Credit-Ready Through Video Content
Mike Faraci, Founder of Red Button Media
Helping Consumers Get Financially Prepared to Confidently Apply for a Mortgage
Brian Vieaux, President and COO, FinLocker
Which Came First – The Refinance or Better Credit?
Paul Gigliotti, CEO & Executive Board Member of Axis 360 Lift
Win the Race to Refinancing Homeowners
Brian Vieaux, President and COO, FinLocker
View all previous articles
Election Year Strategies to Keep Your Homebuyer Pipeline Motivated & Mortgage Ready
Brian Vieaux, President & COO, FinLocker
I recently saw an article in HousingWire titled “Almost 40% of home shoppers hitting pause until after the election.”
With the presidential election just three months away, history suggests that as a loan officer, you could potentially see almost half of your pipeline pause their plans. These are the homebuyers who would have otherwise made a purchase during this time but are now going to wait until the election is over.
So, how are you going to stay connected with your mortgage-ready consumers as they wait?
Given the competitive nature of the market, it’s essential to have a multi-channel strategy to stay connected with these potential homebuyers. Remember, other loan officers and companies are vying for their attention, so you need to stand out.
You definitely need to use your CRM for ongoing communications, but don’t neglect the personal touch of picking up the phone and having an actual conversation with your prospects every few weeks. For younger homebuyers, it’s probably best to text first, but you can always leave a message letting them know you’re available to answer any questions they may have.
Another thing to consider: If you preapproved them in July or August, how will you keep them focused on the end goal and motivated to maintain their credit and financial health?
Leveraging a tool like FinLocker can help keep them mortgage-ready by motivating them to maintain their credit and financial health, and keep their documents current. It’s also a great way for you to stay connected with them while they’re waiting for the election to pass before they jump back into the homebuying process.
While this election cycle occurs every four years, you must be prepared to nurture these buyers at least until the end of the year, especially if they don’t find a home in November or decide to delay their search until after the holidays.
Coming Soon: A New Chance for Approval on Loan Denials
Jeremy Potter, Founder, Next Belt Strategies
A recent trend in mortgage and credit applications is rising denial rates among all applicants. Historically, we know from public HMDA data that historically underserved communities, particularly people of color, are more likely to be denied than their majority white counterparts. One trend in recent denial rates suggests rejections for refinances and first time homebuyers are increasing thanks, in part, to debt and costs. rising across the economy. A common response from many in the media is to look at inflation as a culprit. Whether or not that is a contributing factor, the reality is lending, including mortgage lending, is still woefully behind on cash flow analysis. Instead of using gross income and credit history as the primary indicators, cash flow would use net income and payment records to understand a more nuanced view of a person’s ability to pay or ability to repay.
Getting to a full blown cash flow model and risk analysis will take years. In the meantime, there are two key innovations that are coming soon that may help avoid a denial on credit applications.
Rent is the ideal proxy for mortgage payment
First, Fannie Mae & Freddie Mac allow rent payment history to be used as an indicator of credit worthiness. The connection is obvious. If you can show 12-24 months of being able to afford a set monthly housing payment, it stands to reason a similar monthly mortgage payment is attainable. Rent payment was a tricky data source before digital banking became more common. Rent payments are often not tracked or reported consistently. As fintechs and other data aggregators gained access to consumer data, applicants were able to document and show their rent payment history as proof of financial capability. Today, the GSE program uses two methods to capture and evaluate this date for approval – consumer bank records showing the payment pattern month-over-month, through companies like Plaid, or records from a payment reporting platform, like Esusu. If your lender is not participating, now is the time to explore this option. Should rates drop in the Fall, we may see an influx of purchase applications that would benefit with this added data.
Technology shifts the power back to the customer
The second way cash flow analysis is leading to more approvals is through actual cash flow underwriting systems. Providers are using access to bank account information to evaluate real-time residual income for credit approvals. Largely limited to credit cards, personal loans and auto loans right now, data companies like Prism Data are helping lenders approve loans where cash flow shows the ability to manage the monthly payment or credit limit. One provider that made the leap from consumer credit into real estate credit with a cash flow solution is FormFree. FormFree’s Passport program prepares a first-time home buyers data in a format where cash flow and affordability and documented for lenders. Lenders can buy leads already vetted through Passport or leverage Passport’s technology with their own leads to qualify customers for new products. Either way, lenders have additional visibility into the application and consumers have a better chance of getting approved.
Potential Challenges
1. Implementation. Lenders struggle with technology and adoption. We know this. Trying to adopt a new data source for automated underwriting or a new waterfall prior to a denial means making changes. These are not small changes and many lenders are hesitant to try new things when resources are limited.
2. Adoption. Access to source data has been a gamechanger for many lenders. Importing income and asset data directly from banks and financial institutions saves time and limits costly documents and PDFs. At the same time, consumers can get confused depending on when and how the lender presents the digital option. The most effective time is upfront when getting prequalified or preapproved. Some lenders are attempting to use rent data as a “second look” before denial. It could work but makes it difficult to ask the applicant for more data which may or may not help.
Potential Opportunities
1. Future proofing. This is the future of financial analysis, credit worthiness and underwriting. Real-time, real data will always win. Getting started now puts your business on a path to more approvals this year and a foundation for innovation going forward.
2. Affordable lending investment. Even if the timeline to more leads and more approvals takes time, the investment is valuable today. Regulators and investors want to see how lenders and loan officers are reaching new, diverse communities. Using rent payments and cash flow analysis means outreach and opportunity for members of your community. Working with your legal and marketing teams, your company should be able to take advantage of the investment and the work as an overall strategy.
Bottom line
Today’s “No” can become tomorrow’s “Yes” or “Not Yet.” More data and insight offers more ways for your to help your customers. Looking ahead to potential rate decreases this year and an equally competitive market next year, our customers need every opportunity for an approval. Reporting rent payment data and using new partners for cash flow data is the best way to serve your community and prepare for the short & long term.
How to Be the Difference Homebuyers and Homeowners Need Amid Falling Rates
Sue Buswell, Credit & Score Consultant #sueknowsthescore
Well, we’ve arrived at the moment many have been waiting for – rates they are a dropping!
If you’ve been following this newsletter for some time, you may believe you are ready for the low-hanging fruit of refinances and pent-up purchase demands.
But not so fast. It’s time to be the difference for your clients.
The credit box is still tight, and you need to help those who would be rate reducers and future homeowners navigate today’s stringent approval process.
Start off with a soft credit pull. Today’s soft pulls are AUS reissuable, so why not protect your pipeline in what is likely to be a highly competitive market, one not seen since ’21.
Soft pulls allow you to utilize CreditXpert tools to assist those who may not be eligible for that low advertised rate just yet. Studies have shown that over 50% of buyers are NEVER offered the opportunity to increase their score—be the difference.
And you can time your hard pull for AFTER the client has exercised the Opt-Out process – saving you and them frustration. optoutprescreen.com
Understand that DTI is often the barrier to homeownership.
Current homeowners may be sitting on their equity AND 30K in credit card debt. Help them understand the benefit of utilizing that equity at a lower rate to eliminate that 24% interest (or higher) on their revolving debt.
Then, be the difference and help them understand how to manage their credit through monitoring – with a tool like FinLocker.com so they only charge what they can pay every month.
Familiarize yourself with the down payment options for your first-time homebuyers. downpaymentresource.com
Getting into a home shouldn’t exhaust their funds or cause delays in necessary repairs or upgrades.
Be the difference by helping them understand how to leverage the available options that will keep their financial safety net safe.
Understand that today’s homeowners and buyers are looking for you to be the difference.
There’s No Time Like the Present to Work on Your Credit Scores
Steve Ely, CEO, eCredable.com
Are you sitting on the sidelines, waiting for the home buying market to improve? Most of the experts think interest rates will improve by the end of the year and present more people with the opportunity to buy a home. But you can’t start working on your credit score when you’re ready to go home shopping. You need to work on it now to maximize your score and improve your chances for the best terms.
Here are some common questions we get and some answers that you might find useful.
1) How do I know which credit score the lender will use? Most of the time, you won’t know which score the lender will use. And most lenders still pull your credit score from all three major credit bureaus – Equifax, Experian, and TransUnion – to make sure they’re getting a complete view of your credit reports and the information they contain.
2) Where is the best place to get my credit reports? There are plenty of “free” credit monitoring services that include credit scores and usually a version of a credit report. Just Google “free credit monitoring services” and take your pick. But beware that most of these services summarize the credit reports they present to you. If you want to see unaltered information direct from the source – the source being the actual credit bureau – go to www.AnnualCreditReport.com. You can get all three of your credit reports for free and they will contain all the details you need to review with your own eyes. If there’s any errors, just follow the dispute process that each bureau provides on their website. This might take some time, so do this sooner rather than later.
3) Will the lender check my husband’s credit score in addition to mine? Assuming you are both applying for the mortgage in both of your names, the answer is yes. If you’re applying on your own and you are confident you can qualify with your own income and credit score, then you don’t need to worry about your spouse’s credit score.
Helping Homeowners Stay Credit-Ready Through Video Content
Mike Faraci, Founder of Red Button Media
As rates are expected to drop, many homeowners will be considering a refinance. In addition, some will be in the market for a new home.
Unfortunately, credit denials seem to be on the rise.
For mortgage loan officers, this presents both a challenge and an opportunity. Your clients need guidance on maintaining their credit and financial health so they can move quickly when the market shifts or when life circumstances require them to make a move.
Your video content is a powerful way to deliver that guidance, educate your clients, and establish yourself as the go-to expert.
Here’s how you can utilize video content to help your clients stay credit-ready and maintain financial health, ensuring they’re prepared for any opportunities that arise in the future.
Educating Clients on Credit Health
1. The Importance of Credit Monitoring
• Video Topic Idea: “Why Monitoring Your Credit is Crucial for Future Homebuyers”
• Talking Points: Explain the importance of regularly checking credit reports to ensure accuracy and detect any issues early. Many clients may not be aware that even small changes in their credit profile, like a late payment or a new inquiry, can impact their ability to qualify for a mortgage or refinance.
2. Tips for Improving and Maintaining Credit
• Video Topic Idea: “5 Easy Tips to Boost Your Credit Score Before a Refi or Purchase”
• Talking Points: Offer actionable steps clients can take to improve their credit score, such as paying down high balances, avoiding new credit inquiries, and correcting errors on their credit report. Emphasize how maintaining good credit health isn’t just important for home loans, but for other financial products they may need in the future.
Providing Guidance on Financial Preparedness
1. Building an Emergency Fund
• Video Topic Idea: “Why an Emergency Fund is Your Best Friend When Applying for a Mortgage”
• Talking Points: Educate your audience on the importance of having an emergency fund to cover unexpected expenses that could otherwise impact their ability to maintain their credit or save for a down payment. You can break down different strategies for building a solid financial cushion and how it can prevent financial setbacks when life throws curveballs. This positions you as a holistic financial advisor, not just a loan officer.
2. Managing Debt-to-Income Ratios
• Video Topic Idea: “How to Manage Your Debt to Maximize Your Mortgage Approval”
• Talking Points: Explain the concept of debt-to-income (DTI) ratio and why it’s a key factor in loan approval. Offer tips on how clients can manage their debts, pay down high-interest loans, and avoid taking on new debt that could hurt their DTI.
Establishing Yourself as a Trusted Advisor
1. Reaching Out to Past Clients
• Video Topic Idea: “Why Now Might Be the Perfect Time to Refinance”
• Talking Points: A personal video message to your past clients can remind them of your ongoing support. Address how the changing rate environment might create opportunities to refinance and lower their monthly payments. By proactively reaching out, you not only help your past clients but also position yourself as a continuous resource.
2. Creating an Ongoing Series on Financial Health
• Video Topic Idea: “Your Monthly Mortgage Check-In: How to Stay Financially Fit”
• Talking Points: Launch a monthly or bi-weekly video series dedicated to financial tips, mortgage industry updates, and ways to stay credit-ready. This ongoing communication keeps you top of mind with both past clients and potential new customers. By consistently offering value, you reinforce your role as a trusted financial advisor who is always looking out for your clients’ best interests.
Video content is one of the most powerful tools you can use as a mortgage professional to connect with your clients, both past and present.
Ultimately, it’s not just about helping your clients qualify for a loan… it’s about empowering them to make informed financial decisions that benefit them for years to come. And as you continue to offer this value through video content, you’ll not only attract new clients but also build lasting relationships that set you apart in a competitive market.
Helping Consumers Get Financially Prepared to Confidently Apply for a Mortgage
Brian Vieaux, President & COO, FinLocker
We all know that when consumers come to us looking for a mortgage, what they really want is confidence and certainty. Nobody wants to go into a credit application process feeling anxious or uncertain about whether they’ll get approved. As loan officers, it’s your job to help them feel prepared and confident before they even start the application process.
The best advice we can give to our clients is to get prepared before they engage with a lender. But what does “prepared” really mean? Essentially, it’s about understanding where they stand financially before applying for a mortgage. This includes a thorough grasp of their credit situation, debts, and overall financial health. Whether they’re looking to refinance or buy a home, being prepared can make all the difference.
One of the most effective ways we can help our clients prepare is by providing access to tools that help them get ready for homeownership. A tool like FinLocker is a great example. It’s like giving them their own secure and private sandbox where they can learn to understand their financial situation.
FinLocker allows consumers to dig into their credit, get a handle on their debt-to-income ratio (which, let’s face it, most people don’t think about until they’re starting the application process), and run various scenarios based on their personal data. This helps them figure out where they stand and what they need to work on to improve their chances of a successful application.
Another benefit of using a tool like FinLocker is that it allows consumers to store important documents they’ll need for their mortgage application. They can organize everything in advance, so when it comes time to pre-qualify or formally apply, they’re not scrambling to find paperwork.
This level of preparation gives them the confidence they need to enter the mortgage process with less stress and a better understanding of their financial position. And for us, it means working with clients who are ready to move forward, which can lead to a smoother and more efficient process.
So, loan officers, let’s make it our mission to help consumers get financially prepared before they apply for a mortgage. By encouraging them to use tools like FinLocker, we’re not only helping them feel more confident but also setting them up for a more successful and stress-free application process.
Remember, a well-prepared client is a confident client—and that makes all the difference when it comes to navigating the mortgage journey.
Social media post to attract consumers who need assistance getting prepared to qualify for a mortgage:
Ready to Buy a Home? Let’s Get You Prepared! 🏡
Thinking about buying a home but not sure where to start? Getting financially prepared is the first step toward a smooth mortgage process—and we’re here to guide you!
We can help you:
• Understand your credit and overall financial health
• Improve your credit score and review your credit report
• Calculate your debt-to-income ratio and advise how to reduce it to qualify
• Organize all the documents you’ll need for a stress-free application
Let’s work together to boost your confidence and get you mortgage-ready. Reach out today and take the first step toward your dream home!
#Homeownership #MortgageReady #FirstTimeHomeBuyer #FinancialPlanning #DreamHome
5 Video Ideas to attract prospective homebuyers:
1. First-Time Homebuyer Checklist
Walk through the main steps for a first-time homebuyer to get financially prepared to qualify for a mortgage. Cover essential topics like credit score, down payment savings, debt-to-income ratio, and documentation, to help viewers feel more informed and confident about starting the homebuying process.
2. How to Improve Your Credit Score Before Applying for a Mortgage
Provide actionable tips on how potential homebuyers can boost their credit score before applying for a mortgage. Explain the factors that impact a credit score, impact of credit score on mortgage approval and interest rates, and provide simple strategies for improving credit.
3. Understanding Your Debt-to-Income Ratio
Create an explainer video that breaks down what debt-to-income (DTI) ratio is, why it matters, and how to calculate it. Use real-life examples to help viewers understand how their DTI ratio affects their mortgage application and how to improve it.
4. The Pre-Approval Process Explained: Why It Matters and How to Get Started
Explain the importance of getting pre-approved for a mortgage before starting the home search. Walk viewers through what pre-approval involves and how it differs from getting pre-qualified, how it benefits them in the buying process, and what they need to have ready to get pre-approved.
5. Common Mortgage Myths Debunked
Address and debunk common myths about mortgages and the homebuying process. This can include topics like the belief that you need a 20% down payment, that a down payment is the only funds required to buy a home, that you must have a high credit score to qualify, there’s a better time of year to buy, or that you don’t need an inspection on a newly built home.
Which Came First – The Refinance or Better Credit?
Paul Gigliotti, CEO & Executive Board Member of Axis 360 Lift
Unlike the old dilemma of which came first, the chicken or the egg, the situation with our current economic climate is more serious. However, if we dive deep enough, we can start to uncover some solutions, as well as tips to ensure we don’t get in this situation again and/or how we can be better prepared for when a similar situation arises.
Statistically and emotionally speaking, the current economic state of the nation displays that unemployment figures, along with mortgage rates are coming down, consumer debit is at an all-time high of $17.8 trillion or 16.6% high than 2023; the household debit-to-GDP is at 76%. Now more than ever homeowners have a need to tap into their primary homes equity. If you bought 2+ years ago, there is a good amount of equity to tap into.
The above-stated GDP and consumer debit of 16.6% is like a red-light warning for homeowners who need to access their home equity as it is a direct correlation to the consumer’s credit score. The major reporting bureaus look at many factors when deriving a consumer’s credit score, including the length of time the debit has been opened, payment history, public records or liens and the big one, BALANCE TO LIMIT RATIO. So potentially, the more credit you extend, the worse off your score, and the higher the monthly payment, the more cash going out than coming in, therefore making it harder to make those payments, which can result in late payments. It’s a vicious circle.
My strongest suggestion is to avoid charging up debt. However, if this is unavoidable, have a plan to get out of that debt. It’s important to remember that your credit card debt is a loan with more than likely high rates and you have to pay it back. If you do get into debt and are struggling to pay it off in a reasonable amount of time, take heart; it just takes a little ingenuity, data, determination and support to get yourself out of that debt. Some quick tips:
- Data / numbers: Make a budget down to the penny and highlight those expenses that are not necessities (you know what these are).
- Analyze how long it will take you to pay off your debt by cutting those expenses.
- Determine if you can create more income by consulting, gig economy, part-time work, renting a room out, VRBO your home, etc.
- Combine both – cutting expenses back and creating additional income to take your goals further, including savings (so you don’t charge up again).
Although some professionals talk about the need to re-vamp the credit reporting system and algorithms, saying it’s outdated and doesn’t support the spending habits or lifestyle of today’s consumer—it is our current system. I personally believe it is our responsibility to make good on loans we take out.
So, plan to be as best prepared as possible and make sure you educate yourself. After all, knowledge is power and I do believe that knowledge came before the power.
Win the Race to Refinancing Homeowners
Brian Vieaux, President & COO, FinLocker
In the coming months, many homeowners who purchased within the last 24 months will be eyeing opportunities to refinance as interest rates begin to drop. As a loan officer, now is the time to position yourself as the go-to resource for these homeowners, ensuring they think of you first when the time comes to refinance.
The truth is, if you haven’t been in regular contact with your past clients, they might not remember you when they’re ready to refinance. Instead, they could turn to their servicer, who they hear from at least once a month or a mortgage finfluencer they found on Instagram or TikTok who is posting about the benefits of refinancing. To return to the top of their mind, it’s essential to start reconnecting with your past clients today—especially those with mortgage rates above 5%.
Here are some practical steps to help you get started:
Segment Your Client List: Begin by reviewing your database and identifying clients who closed loans with rates above 5%. These homeowners are your priority because they stand to benefit the most from refinancing as rates drop. But don’t stop there; life circumstances can change rapidly. Other clients might need to buy a new home sooner than expected due to a growing family, a change in employment, or other significant life events.
Personalized Outreach: Personalization is key when reaching out. Make your communication relevant to their preference, whether it’s a phone call, email, text, or all three. Remind them of the value you provided throughout their initial loan and offer to review their current mortgage to see how much they could save by refinancing when rates drop.
Provide Value with Content: Share valuable content that resonates with their current homeowner journey. For instance, send out a newsletter with tips on home maintenance, tax advantages of refinancing to make capital home improvements or the benefits of shortening their loan term. By consistently providing helpful information, you position yourself as a trusted advisor rather than just another salesperson.
Leverage Technology: Giving homeowners a tool like FinLocker will enable them to track their home equity and home value, view their net worth, and budget for home maintenance. Use a CRM to automate follow-ups and track client interactions. This ensures no one slips through the cracks and allows you to efficiently stay on top of your communication efforts.
Host a Webinar or Q&A Session: Host a virtual event where homeowners can learn about the benefits of refinancing in a low-pressure environment. This not only adds value but also gives you an opportunity to reconnect with a broader audience at once.
Remember, the race to refinance is on, and the winners will be those who are proactive, persistent, and personalized in their approach. Start today, and make sure your clients know you’re ready to help them seize the next opportunity.