Orion has seen, first-hand, how important brokers are in constantly coaching and teaching potential home buyers on financial basics. It is something that our brokers pride themselves on, and it benefits people whether they use a broker or not to help them buy a home. What do we tell clients, potential or otherwise, about finances, and potentially buying a home?

The first step is to see what’s “coming in.” Income is the money your client expects to receive every month, like take-home pay, any other sources of income such as interest, Social Security benefits, pension payments, alimony, child support, workers’ compensation, unemployment, and disability. If their earnings are irregular, like commissions for example, or project work, it’s better to underestimate than over estimate your client’s income.

Next, help your client figure out what is “going out.” Some expenses stay the same from month to month, like rent or a mortgage payment. Others are variable, like food, clothing and gas, or travel. It’s better to over-budget for expenses. Does your client have any monthly contributions to savings or retirement they’re already making?

Brokers help clients prepare a simple worksheet, similar to what companies do by having a profit/loss statement, to compare total expenses to total income. Orion never wants to make a home loan to someone who doesn’t have the ability to repay the loan!

If their income is considerably greater, your client may want to increase their savings contributions to help them reach their down payment goals sooner. If your client’s income is less than their total expenses, they may need your help in examining their expenses for opportunities to cut back to eliminate the difference. Ask your client if they have enough savings for 3 to 6 months’ living expenses. If not, it’s good to build up those reserves in addition to saving for a down payment or any other large expenses.

Brokers are instrumental in finding out, considering, and documenting a borrower’s income, assets, employment, credit history and monthly expenses. All lenders cannot just use an introductory or “teaser” rate to figure out if a borrower can repay a loan. For example, if a mortgage has a low interest rate that goes up in later years, the lender must make a reasonable effort to figure out if the borrower can pay the higher interest rate too.

Financial education and literacy are important to Orion, and should be to every broker, regardless of whether your client buys a home. And we’re here to help, yet another reason to use us and use a broker rather than just look to the internet when considering financing a home purchase!

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