For more articles on building wealth
via home equity
Life expectancy is nearly twice what it was 100 years ago, and life-spans are continuing to increase, so many Americans are growing
increasingly concerned about running out of money in their elder
years. Although living longer is a blessing, longer lives add significant
financial risk when it comes to retirement.
Real estate is illiquid, so taking out a purchase mortgage or refinancing an existing loan can have serious consequences for financial
security later in life. Mortgage decisions — such as determining a
loan amount and downpayment when buying or selling a primary
residence, second home or investment property — can have long-term impacts on retirement savings. Borrowers with an eye on their
life-long financial well-being may have questions that go beyond
monthly payments. >> L
a division of Flagstar Bank
By Scott Chase
View these articles and more at
“Homeownership Trumps Student Debt,”
“Do Your Banking at Home,”
“Selling Wealth Creation,”
“Longevity’s Impact on Financing,”
By the time an average American reaches 65 years of age, 83 percent of their net worth comes from home equity. The other 17 percent comes from 401k plans, savings
and other investments. Many homeowners who hold
these well-cushioned “ 17 percent” accounts have one
thing in common: They have a financial adviser.
In a highly competitive housing market and rapidly
evolving technological era, mortgage loan originators
more than ever need to communicate the wealth
potential of a home to their borrowers and help them
see past the simple current value. The home is the
largest asset that most people will ever own. Unfortunately, homeowners rarely think of their home as an
asset, much less as part of their retirement plan, but
Many U.S. taxpayers can recall the cheesy H&R Block
commercial that aired a few years ago with the tagline,
“Get Your Billion Back America.” It may sound dramatic,
but this message rings true in real estate and lending.
Much like when it comes to filing taxes, homeowners
are terrible at maximizing their home’s wealth
potential. The result? They could be leaving more than
$100 billion on the table every year.
Homeowners have unlimited access to data and
information today through the internet. The most important questions aren’t being asked, however, much
less answered. So, it falls to mortgage professionals to
help their clients understand, and take action to build,
the long-term wealth potential of their homes.
A 14-month study conducted in the Denver met-
Pros are educators
ropolitan market asked homeowners, “If there was a
service that provided you with intelligence to easily
build wealth with your home, from what source would
you want to receive this service?” The vast majority
answered, “My lender or real estate professional.”
They also were asked, “Why these professionals?”
Homeowners universally responded, “Because it’s per-
sonal.” Although this feedback suggests that any loan
originator with relationships can capitalize on this un-
met need, the naturals for this challenge will be the
educators, entrepreneurs and innovators.
Top producers are not only qualified and seasoned sales
professionals, they often become known in their local
sphere as teachers. They have truly perfected the art of
helping borrowers move through a transaction with total confidence and earn their degree in “Mortgage 101.”
These originators clearly see the opportunity presented
by the 83 percent and keep that top of mind.
These leaders and educators are finding multiple
ways to engage and re-engage with past and prospec-
tive clients regularly. They do everything from holding
first-time homebuyer classes for the general public to
holding informative webinars for more seasoned buy-
ers as well as financial professionals. They stay up to
date on current market trends, hot neighborhoods,
changing guidelines and understand what all that data
means for their buyers.
In 2017, the debt-to-income ratio for conforming
loans changed from 45 percent to 50 percent on conventional Fannie Mae loans. This guideline change
had massive implications for buyers nationwide.
Recently, the U.S. Department of Veterans Affairs
increased the loan limit on VA loans by $29,000, to
$453, 100, except in 220 high-cost counties where the
limits are even higher. That has given some veterans
life-changing opportunities to buy the home they
previously thought they could not afford. Educators
track changes like these and are quick to communicate their effects to clients.
Pros are entrepreneurs
When 83 percent of the average homeowners’ wealth
comes from their home, every loan originator nationwide has a new opportunity to frame the concept of
homeownership and subsequent refinancing, rental
opportunities and real estate investing with a fresh
These entrepreneurs call to congratulate their clients on the 11 percent increase in value from when
they purchased their home. They explain in depth refinancing options whenever possible, breaking down
15-, 25-, and 30-year options. They do their research
and they seize opportunities whenever possible.
Ernie Graham is CEO and founder of Homebot. He is a
life-long technology entrepreneur who has been a leader
at multiple startups and public companies. Graham also has
been a top-producing real estate agent, brokerage owner and
MLS director. In 2011, his startup SocialBios was acquired by
Realtor.com, where he led their consumer innovation lab.
In 2015, he co-founded Homebot to revolutionize the way
consumers build wealth using the largest asset they will
ever own. Reach Graham at firstname.lastname@example.org.
Tap Into the 83 Percent
Top producers help homeowners build wealth through their homes
By Ernie Graham
Continued on Page 70 >>