Rethink Everything You Know About Helping Renters Start Their Homeownership Journey

Building Trust by Preparing Renters for Homeownership

This week, Brian Vieaux highlights an essential tool that should be in every loan officer’s arsenal to empower renters to make an informed buy vs. rent decision, and Catalina Kaiyoorawongs provides practical suggestions to consumers to make a mortgage more affordable.

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How to Empower Renters to Navigate the Buy vs. Rent Decision

Brian Vieaux, President & COO of FinLocker

Loan officers play a crucial role in guiding renters through the emotional and logical decision-making process of transitioning from renting to homeownership. One essential tool that should be in every loan officer's arsenal is the Buy vs. Rent analysis, a dynamic assessment that adapts alongside the individual's financial circumstances and market conditions.

This analysis should provide more than a mere one-time snapshot. It should be a dynamically changing analysis that adjusts to fluctuations in interest rates and the renter's savings, displaying their down payment, loan amount, monthly payment and purchasing power over time. However, one of the most compelling aspects of this analysis is its ability to highlight the cost of delay.

In today's real estate market, where property values are continually rising, the cost of waiting can be significant. Every six month delay could mean the target price of the desired home becomes out of reach for the renter. Even a modest appreciation rate of 2% can translate into a considerable reduction in purchasing power, diminishing the affordability of the dream home based on the renter's current financial standings.

The Buy vs. Rent analysis offers much more than a static comparison of monthly rent and mortgage payments; it serves as a compass, guiding renters through the intricate maze of homeownership decisions. By highlighting not only the immediate financial implications but also the long-term consequences of delay, loan officers empower renters to make informed choices that align their lifestyle and family aspirations with their financial goals.

By leveraging a comprehensive Buy vs. Rent analysis, loan officers become advisors guiding milestone transitions, not just facilitating transactions, helping renters embark confidently on their homeownership journey while navigating the complexities of the ever-evolving real estate market.

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Maximizing Opportunities to Make a Mortgage More Affordable

Catalina Kaiyoorawongs, CEO & Co-Found of LoanSense

In the current housing market, buying a home now, if you can afford to do so, offers several advantages over waiting. The advantage of this market is that the people who can close are those who earn less money despite higher interest rates. The average buyer earns about $16,000 less than at the height of the lower-interest market, so homes have fewer offers. It is less of a seller's market right now, so there is less competition, and if you're able to afford to buy now, you can get competitive offers, buy at the listed price or even at the discounted price.

Finding methods to increase affordability is key, and maybe including some unconventional ideas, like buying a duplex with family or putting a tiny home in your backyard to help pay the mortgage.

If you're currently unable to qualify for a mortgage right now, getting a full financial picture to determine your pathway to qualifying is important. Look into down payment assistance programs, which vary by state, and talk to a loan officer who understands them and how to work with state programs to help qualify.

Lastly, focusing on paying off the highest-impact debts to pay down or pay off may be helpful. For example, paying off huge amounts of credit card debt may not help your debt-to-income that much because debt-to-income only counts minimum payments. If you, for example, have an auto loan, paying that down may be helpful, unless you have fewer than 10 payments, the auto loan is then not included in the debt to income. If you have student loans, you can enroll in a federal program and use the difference between your fully amortized payment and your income-driven plan to pay off an auto loan, for example. Those are ways to navigate a full debt payoff plan. LoanSense can provide additional insight into student loans and help borrowers consider their student loans in their debt payoff plan.

My own housing hack I recommend to others: I purchased a large single-family zoned in an area that was legal to have multi-family units. I purchased a home with a floor plan that allowed me to split into a duplex with a large backyard. I had a custom-built tiny house for about $40,000, ?which helps my cash flow as I make about $1,500 a month. I list the tiny home for medium-term rentals to provide housing for mostly travel nurses and professionals, so I'm now able to cash flow on two units.

Making a mortgage more affordable involves various strategies aimed at finding "free money" from downpayment assistance and loan forgiveness programs, lowering monthly debt payments, and managing overall housing expenses. Implementing these strategies can help you get into a home and make your mortgage more manageable.

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Thanks to all the Contributors representing

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