Welcome to FinTalk!

To introduce the FinTalk contributors, throughout the first issues, each expert will explain why they advocate for providing financial education.

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Brian Vieaux , President and COO, FinLocker

Today a little less than one-third of homebuyers are first-timers. Studies continually point out that the average first-time homebuyer truly isn’t emotionally and financially prepared to buy a home and become a homeowner. It’s much more than the mortgage application and approval process.

I was inspired to begin advocating for financial education when I realized that, sadly, my first-time homebuyer-aged kids were not ready. They live in a house that you would assume would have better prepared them, but as a parent, I didn’t have the tools to prepare them. Their formal schooling also didn’t prepare them for what it means to be financially responsible and prepared to buy a home, which leads to a gap in their knowledge base. While technology continues to evolve and it’s drilled into our heads from a marketing perspective that buying a home is as easy as “push button, get mortgage,” what’s still missing in the equation is that it’s one thing to qualify for a mortgage, but it’s another thing to be ready emotionally and financially to own a home. Getting a mortgage is only one component of homeownership. Homebuyers need to be aware of and plan how to afford the other expenses. I knew as an industry, we could do better.

FinLocker is the primary mechanism for this newsletter. We offer a set of digital financial tools for consumers. Still, we firmly believe those tools are most powerful when matched with a local mortgage professional. By arming local mortgage professionals with educational content, they can build and educate their community of future homebuyers by conducting homebuying seminars, educating their audiences on social media, and combining that education with digital financial tools. That’s a win-win for everyone – a winning strategy for loan officers and real estate agents and a winning solution for future homebuyers.

Kristin Messerli , Executive Director, FirstHome IQ

Mid-sophomore year in college, I made the decision most parents fear, and I decided to change my major from personal financial planning to turn my sights toward social work. By the time I was 24, I was making a whopping $28,000 a year, and my partner and I were stressed every month to make ends meet. Financial stress worsened my already negligible mental health, and the debt began to pile up.

I started some side hustles to make extra money, one of which turned into a business that would change my life forever. It wasn’t life changing simply because I could pay my bills, though it gave me financial stability for a decade. It was life changing because making money gave me a sense of ownership and power in my own life. My mental health improved. I left a toxic relationship. I moved to Los Angeles, and I built a life I love.

Financial literacy and homeownership give people much more than education and a home. The business we are in creates the opportunity for individuals to own their future, resulting in stronger communities, more stable families, and healthier individuals.

Sue Buswell , Credit and Score Consultant, #sueknowsthescore

At 18, armed with a diploma, a curious mind and few prospects, I interviewed for the file clerk position at the Credit Bureau of Southern Nevada, and fortunately, they took a chance on me. Thanks to the education I received there, I have owned 11 homes, selling the last 4 by owner. Today I own my home and live debt-free. Over the years, I have helped friends and family understand how to succeed financially, and today I share my knowledge on LinkedIn as #sueknowsthescore.

Organically, by working through every position available until I was managing the Mortgage Division of a TransUnion affiliate, I learned valuable lessons about credit. About what a Credit Bureau does. About the Fair Credit Reporting Act, about managing your money, your credit obligations and FICO scores.

Seeing the need for credit education in the Mortgage Professionals, I worked with, I created and taught CEU classes to Loan Officers. The details of FICO Scores. How to analyze a credit report, and how the credit bureaus differ in their reporting of data from the same creditor.

But this same information needed to get to the consumer. I created a credit consulting program and met with potential homeowners. I spoke at Junior Colleges and assisted my mortgage partners whenever they needed a credit expert.

The need to teach financial literacy has never been greater. Our system of credit dependency in adulthood does not come with a manual. There are no formal classes in high school or college that address credit, scores, or how to become credit-ready for homeownership.

I am so very fortunate that someone took a chance on me more than 30 years ago. It is both my privilege and responsibility to share what I know, to help more generations become credit educated, and, eventually, debt-free homeowners.

Leveraging financial education as a competitive differentiator

Jeffrey Walker , CEO and Co-Founder, CredEvolv

Most realtors and loan officers understand that financial education is crucial for someone considering home ownership because it empowers them to make informed financial decisions. It is particularly important for consumers who don’t have the credit scores to qualify for a mortgage as this is a significant barrier to home ownership.

According to a 2020 study by the Urban Institute, the primary reasons that consumers do not qualify for a mortgage are 1) a low credit score, 2) insufficient income, and 3) a high debt-to-income ratio. Specifically, the study found that 17.3% of mortgage applications were denied due to a low credit score, while 11.7% were denied due to insufficient income, and 8.9% were denied due to a high debt-to-income ratio.

Consumers who don’t have the credit scores to qualify for a mortgage have several options available to them:

1. They can obtain a copy of their credit report and check for errors, which can be disputed and corrected.
2. They can pay down debts and make timely payments to current creditors.
3. They can explore credit-building options like secured credit cards.

While some consumers successfully resolve credit issues on their own, many can dramatically increase their chances of success by partnering with a HUD-certified housing counselor who can develop a customized success plan to work towards their home ownership goals. These non-profit agencies provide valuable advice on budgeting, credit management, and debt reduction and can compliantly help consumers build their creditworthiness over time. Don’t confuse this with traditional credit repair companies who primarily focus on disputing tradelines without educating consumers.

Lenders and realtors who are educated and informed about financial education add value to their consumers and their business when they help introduce their consumers to the most effective resource.

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