Helping Your Borrowers Get Their Financials In Order
If you’re looking to close more mortgage loans, you’ll need customers who qualify. Personal finance classes are not common in high schools, and many potential borrowers have poor role models when it comes to finances. This is why it’s important to help prospective home buyers get their financial houses in order.
Pay Off Debt
High debt levels can be a hindrance to getting a mortgage. Therefore, you’ll want to educate clients on the topic of debt. Credit card debt is one of the worst forms of debt that people can hold. Credit cards come with high-interest rates, and because they are revolving accounts, it’s easy to run up more and more debt. A high debt utilization percentage can limit your clients’ ability to qualify for a mortgage.
Encourage Cutting Costs
Those who want to buy a house will want to make sure that they don’t wind up house poor. This situation occurs when housing expenses make up an unsustainable percentage of a household’s income. Cutting back on expenses is a good way to make a house more affordable. This is where paying debt can help. Those without a credit card bill or a car payment will have more wiggle room when it comes to qualifying for a mortgage.
Save Up Money
While there are some governmental lending programs that offer subsidized loans that require low down payments, it’s a good idea for your borrowers to save up a nice down payment. A down payment of 20% provides immediate equity in a property. This equity will provide a hedge against a quick market downturn which could prove very useful. Cutting costs and paying off debt can provide more margin for saving up a nice down payment.
Those who have their financial houses in order will be more likely to qualify for a mortgage. Additionally, these people will be less likely to default. Therefore, educating your borrowers can pay off for all parties.
Have questions? Speak to an expert for more information.