Innovative Ways to Prepare First-time Homebuyers for Homeownership

This week,?Sue Buswell offers mortgage originators practical advice to help homebuyers get credit ready, and Jeremy Potter explores the emotional journey of first-time homebuyers as they transition from renting to homeownership.

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

Jeremy Potter

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, #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.

Thanks to all the Contributors representing