These expenses are all-important, but often misunderstood. As a mortgage professional, you are no doubt well-versed in all aspects of the homebuying process. That includes closing...
Empower Clients by Sharing Your Mortgage Knowledge
Purchasing a home is one of the biggest investments many Americans will make — and perhaps one of the least understood. From terminology to best practices, many buyers are largely out of the home financing loop. In fact, a 2020 survey by Bankrate found that 27% of homeowners across the nation didn’t even know their current mortgage interest rate.
So, how can mortgage loan originators (MLOs) impart wisdom to clients, empowering them through financial education? Making a point to provide clarity and context, along with your usual impeccable customer service, are great places to start.
Suggest that your borrowers check their credit score
Most MLOs know that good credit may be key in obtaining the ideal home loan, but many borrowers may not be on the same page. In 2019, almost 40% of Americans didn’t know their credit score. What’s more, 35% were unsure what level of credit score they’d need to get a mortgage loan. With so many free and convenient means to check credit scores these days, a little guidance from you could make a world of difference for your borrowers.
Ensure they understand how debt-to-income ratio (DTI) works
Acronyms provide an added hurdle for buyers navigating the home financing process. DTI may be particularly intimidating, as it’s often mentioned early in the process. It’s estimated that over 25% of student loan debt holders say their debt has impacted their decision or their ability to purchase a home. So, providing a clear picture of how debt and income relate to a mortgage could help promote financial education for borrowers, regardless of their situation.
Shed light on any unexpected costs
From lender fees to private mortgage insurance (PMI) to appraisal fees, plenty of homebuyers are shocked when it’s time to cover unanticipated closing costs. Whether you’re working with first-time or repeat buyers, setting clear expectations helps the borrower feel empowered during their homebuying journey.
Provide a paperwork checklist
For certain borrowers, finding last year’s W2 may be daunting enough, let alone pay stubs, bank statements, and previous addresses. Download this simple checklist for clients to quickly refer to when gathering necessary paperwork. Once they’ve collected the required documents, you can take a moment to explain how each piece fits into the home financing puzzle, growing their knowledge and emphasizing the importance of these records.
Champion pre-qualification or pre-approval
Now more than ever, a pre-qualification or pre-approval letter on hand helps clients remain competitive in today’s fierce market. Consider taking some time to explain the potential importance of pre-qualification or pre-approval, as well as any relevant requirements. Clients will go forth with a new understanding, helping ensure the transaction is that much smoother.
For many clients, home financing may be intimidating. Lucky for them, their MLO is a wealth of information. No matter the client, taking some time to build understanding can bolster financial literacy, boost confidence, and improve outcomes.
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