Innovative Ways to Discuss Credit Inquires and the Hidden Costs of Homeownership

This week, Brian Vieaux advises loan officers on the importance of discussing the total cost of homeownership with first-time homebuyers, and Sue Buswell provides practical advice on guiding homebuyers in understanding credit inquiries.

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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.