You’re a loan officer – not a financial adviser, right? So why would a potential home buyer look to you for help with their financial security? Simply put, it’s because they need your knowledge and mortgage experience in order to succeed. If you want to close more loans, follow these simple steps to help create a powerful bond between you and your clients that will keep them – and their friends – coming back.
- Explain the importance of their credit score! You’d think in today’s world that we all recognize the importance of a credit score and what it entails for your future finances, but not all of us do. Ask your client what they understand their credit score to represent, and then fill in the blanks. Show them where they fall on the spectrum and what that means for their potential mortgage rates, and give examples on how to improve their score.
- Show them where they can improve. We know that if their debt to income ratio is too high, they’ll struggle to get a decent loan. Most people assume that their student loans are a big issue, but don’t realize that their credit card debt is an even bigger deterrent for mortgages. Suggest that they pay down a sizable portion of their debt, and if that isn’t an option, ask them to consider contacting their credit card companies to lower their interest rates.
- Help them prioritize. There’s a difference between “good debt” and “bad debt” so having a student loan or a mortgage is a plus, but when they have too much in the good debt category, they’ll need to focus on paying everything down. If they have multiple items in their “bad debt” category have them pay down the debt with the highest interest rate first, and then recommend moving on to pay down auto loans.
- Show them budgeting tools. They need to take their financial security seriously. There are generally many ways for someone to cut back on their expenses, but once you have everything laid out in front of you it’s a lot easier to visualize where your money is going. Give them simple instructions on how to skirt the unnecessary expenses and have them put that money towards their debts or into a savings account.
- Set goals. Identify their goals and help them achieve them. Send reminders and tips on how to stay positive and get their finances in order. Work with them on a timeline and suggest they reward themselves when they pay things off.
Taking the time to educate your buyer in the beginning will save you time, and save them frustration if their application gets turned down. These may seem like simple steps to you, but to a buyer who isn’t as industry savvy and unsure of where they’re going, they will alleviate pressure and make the entire experience worthwhile for both of you.