Fabio Rivas of LenderClose: Knowledge is Power: Creating Borrower Partnerships with Information

Fabio Rivas is Assistant Vice President of Client Relations with LenderClose, Des Moines, Iowa, a portfolio real estate and home equity lending technology platform. As an NMLS licensed mortgage loan originator with experience in mortgage banking as well as finance and insurance, heis a well-versed relationship builder that seeks to inject speed and efficiency into the lending lifecycle.

In today’s world, a wealth of financial information is only a click away. Borrowers can learn almost everything they need to know about a mortgage or home equity loan through a simple Google search. They can even compare lenders and rates, and tailor a loan to fit exactly what they are looking for from the comfort of their own home. Despite all of this information being readily available, some people still lack the appropriate knowledge and confidence to further their financial literacy. As lenders and financial experts, we can bridge this gap by proactively offering resources and information while being better educators and partners to borrowers.

Being a better educator starts with having a full picture of the borrower’s financial situation. By taking a consultative approach, loan officers can ask questions to better understand what goals the potential borrower is trying to achieve. LOs can then provide the appropriate financial education that is relevant to best prepare them for homeownership.

Prioritize financial education

By being more financially aware, borrowers can better understand where they are and what proactive steps they can take to get into a better financial position. Resources like financial workshops, monthly newsletters and webinars are powerful tools that can be offered as part of the lending process. These services will not only establish a relationship built on trust and knowledge, but will even eventually help borrowers establish their financial independence.

In a typical scenario, a borrower approaches a LO after viewing a house with a realtor the previous weekend. They want to make an offer on the house and begin the application process. While the house is listed within a price range they believe is manageable, the borrower could be unaware of potential blemishes on their credit score or challenges with their debt-to-income ratio. These factors can prevent them from making a competitive offer, or potentially not being able to make an offer at all.

Professionals in the mortgage industry can easily forget the lending process is not second nature to most new borrowers. This can leave inexperienced borrowers confused and frustrated about why they are unable to buy their dream home when they want to, and the relationship with their lender can be wounded as a result.

Encourage pre-qualification

Lenders should make borrowers aware that pre-qualification for funding should be the first step to homeownership and can eliminate the disappointment of missing a home they really want. It is important to explain to borrowers that starting the pre-qualification three to six months before looking can make home shopping less stressful and allow them to make offers quicker.

Lenders must also educate borrowers on the factors that affect pre-qualification, such as how long they have been at their job, their debt-to-income ratio, current credit score and if there are going to be additional applicants on the loan.

Offer credit counseling

Borrowers may not understand the significance of a credit score or how to improve it. LOs can help borrowers be more at ease when asking credit-related questions by prompting a natural conversation. For example, a borrower may ask if an unused credit card should be closed out, and an LO can explain that it could be positively contributing to their length of credit history. From there, LOs can propose opportunities that could help boost the borrower’s credit score. For example, there may be an opportunity to suggest a borrower focus their efforts for the next six months on keeping their credit utilization rate below 30%, which can be done by making payments more frequently and not accruing new debt. If a borrower is not already aware of this concept, it can make the difference between improving or damaging their score and the likelihood they can buy the house they want.

Borrowers feel confident and knowledgeable when they are informed. Lenders can establish a more seamless experience for everyone involved and generate mutually beneficial relationships built on trust by offering resources and prioritizing education that can spur more knowledgeable borrowers.

(Views expressed in this article do not necessarily reflect policy of the Mortgage Bankers Association, nor do they connote an MBA endorsement of a specific company, product or service. MBA NewsLink welcomes your submissions. Inquiries can be sent to Mike Sorohan, editor, at msorohan@mba.org; or Michael Tucker, editorial manager, at mtucker@mba.org.)