Debt Consolidation

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How Lenders Can Help their Borrowers

There’s been a lot of buzz recently about refinance in the mortgage industry; why it’s a good time to refi, how much consumers can save by refinancing, and what new and current homeowners can expect in the coming months. However, people are still hesitant to refinance their homes. With more wealth locked in homeownership than ever before, it’s time for Loan Officers to educate their consumers on if and how they should refinance, and Mortgage365 is premiering the perfect tool to help them do just that.

The Economic Context

In today’s economy, it’s common knowledge that most people, particularly millennials, are saddled with debt. Often times it’s student debt, but other non-homeowning debt is common as well. According to an article by Forbes, student debt has reached an all-time high at 1.5 trillion dollars owed. Additionally, credit card debt has reached $1.057 trillion as of March 2019. In total, between only student debt and credit card debt, the American population is in the hole around 2.557 trillion dollars. This is a debt crisis, as stagnant wages, an over saturated job market, and years of debt weigh on the shoulders of this country’s up and coming generation.

It’s not surprising, then, that young people are finding it harder to purchase homes. Despite reports that show nearly 90% of millennials want to become homeowners, the rate for homeownership for millennials is about eight percentage points lower than that of both Generation X and the Baby Boomers. Simultaneously, however, there is an all-time high of wealth locked into homes and homeownership. According to a TransUnion study, home equity has just reached 14.4 trillion dollars, up more than 8 trillion from 2009. As a result, the market is poised for homeowners to refinance their loans. Refinancing a loan can help homeowners take control of their wealth and eliminate debt, setting them up for a more secure future.

Fear of the Refi

Despite having more than triple the amount of wealth locked into home equity as the amount of student and credit card debt combined country wide, people are often still hesitant to refinance their home loan. It’s a common narrative that refinancing your home in order to pay down your debt is a short-term solution that doesn’t solve the overall financial problem. Additionally, many young consumers may have witnessed their parents struggle during the Great Recession and have residual, and understandable, fears about taking a risk with a refi loan or homeownership. 

At the same time, it also may seem difficult or counter-intuitive for Loan Officers to suggest refinancing to their borrowers. With the average Loan Origination System, it can take hours to produce comprehensive scenarios for debt consolidation that will inform borrowers of their options. In short, borrowers are hesitant to refi because they don’t understand how refinancing can help them, and LO’s may be slow to provide that information because it’s difficult to pull it together.

At Mortgage365, we believe that we have solved this problem.

Debt Consolidation in Mortgage365

We believe that if the consumer truly understood the benefits of homeownership and refinancing their loans, they would be more likely to take the risk of buying a house, and subsequently harness that purchase to provide a firm foundation to build wealth that informs many of their subsequent economic decisions.

Mortgage365 is getting ready to launch new debt consolidation functionality that allows Loan Officers to build out a variety of options for both reducing monthly payment and for reducing total debt owed in only a few minutes.

This tool will not only enable loan officers to encourage borrowers to go for a refi, but perhaps more importantly, will also allow them to educate the consumer on how to successfully use a home as a financial vehicle. Using simple toggle functionality, a loan officer can create multiple scenarios that consolidate a consumer’s debt faster and easier than any other tool currently available on the market, bringing debt consolidation technology truly to the point of sale.

Take a look at a quick video on Mortgage365’s Debt Consolidation functionality:

The borrower’s needs were front and center as the module was designed so it’s easy to read and interpret from a layman’s perspective. When consumers are informed and empowered to use their home equity to make smart financial decisions about their lives, the entire economy thrives. 

Whether the LO talks the borrower through the process via a screen-share app or provides a variety of options to send via presentation, Mortgage365 makes doing the right thing by your borrower easier than ever before.

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