Buying A New Home & Going Through All That Paper Work Can Be A Major Hassle

A Loan Officers main priority should be closing more loans, but they should also give their buyers a sense of financial stability. That is the important thing because first time homebuyers are not too keen on shelling out a lot of cash and if/when they do, it can be a scary thing.

Instead of encouraging them to sign on the dotted line, it’s a Loan Officers duty to make them feel comfortable. When Loan Officers take a more relaxed approach and offer more sound advice, they are more than likely able to build a stronger relationship with their clients. When that happens, the client is going to come back because a sense of rust is built.

Check Out Our Top Five Ways, Loan Officers Can Help Their Apprehensive Borrowers; Feel Better About Getting A Loan…

 

Learn About Credit

Encourage first-time homebuyers to get a free copy of their credit report from each of the three major credit agencies once a year. If they discover an error on any of the reports, they should submit a request with the appropriate credit bureau to have the error removed. Their credit report will give them a better understanding of where they fall on the credit spectrum, and you can explain what that means for their financing costs.

If their credit scores come in lower than anticipated, you can suggest ways to improve them, which could potentially reduce borrowing costs.

Identify Financial Problem Areas
While student loan debt certainly gets a lot of press, often it’s actually credit card debt that can have a more harmful effect on borrowers’ financial stability by inflating their debt-to-income ratio (DTI). The best solution is to pay down outstanding credit card balances. The National Foundation for Credit Counseling recommends credit card debt payments be kept to within 20% of monthly income.

Prioritize Debt Payoff
If paying down debt is an option, help your borrowers understand which debts to pay first. As you know, not all debt is created equal. Mortgage loan debt and student loan debt are generally considered “good debt” since they position individuals to increase their future net worth. However, since payments toward good debt will also factor in your borrowers’ DTI, there is the concept of too much of a good thing.

Take time to suggest they evaluate all of the debt they hold and the various interest rates on that debt. Typically, they should pay down debt with the highest interest rates (typically unsecured credit cards) first. If they have student loan debt and auto loan debt, suggest they give priority to paying down the auto loan, regardless of the interest rate, because auto loans are generally not viewed as good debt.

Find Ways to Cut Back
One of the simplest ways for borrowers to build financial stability is to identify how they can cut back on expenses, such as eliminating a couple of stops at the coffee shop each week, bringing lunch to work or limiting personal travel. Suggest that they add money they find through expense cutbacks directly to their savings account or use it to pay down debt. Another tip would be to suggest they put at least some of their monthly income into a savings or retirement account each month.

Set Goals – Change Their Mindset
Helping borrowers achieve financial stability is also about helping them set manageable goals, stay positive and understand the big picture. If their goal is to secure a mortgage, work with them to set a timeline and provide tips and insight for reaching that goal. Often, financial stability comes through paying off debt. If this is the case for your borrowers, suggest they reward themselves in some small way each time they pay off one of their debts.

 

Encouraging First Time Homebuyers To Get A Copy Of Their Credit Report From The Three Major Credit Agencies, Once A Year, Is A Great Idea!

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Article Source: Loan Officer Hub