VyStar Credit Union is working to make it easier for prospective homebuyers at a time when it's been especially hard for these members.
The Jacksonville, Florida-based institution is releasing its own version of mortgage-fitness app FinLocker, called Dream2Own, in the third quarter.
FinLocker pulls a consumer's data from key documents, such as pay stubs, bank accounts and credit cards, to provide a homebuying budget that suits the consumer's financial status. Consumers can use this information to create an in-app savings timeline toward mortgage approval.
Along the way, customers have access to local lending professionals, educational materials certified by the Department of Housing and Urban Development and other budgeting and spending analysis tools on a dashboard.
VyStar's Dream2Own will initially be available to consumers who have traditionally been underserved in the mortgage market or that need help with bolstering their credit application. That will include beneficiaries of HabiJax, Jacksonville's Habitat for Humanity affiliate.
"We've seen single moms that have never owned a home in their life, and they're in their 60s," said Jennifer Kouchis, senior vice president of real estate lending at VyStar.
Members who previously had their mortgage application rejected will also be able to access the app as a way to "loop them back around," Kouchis said. Eventually the app will be available for free to all members at VyStar, which is the 13th largest credit union in the U.S.
Brian Vieaux, president and chief operating officer of FinLocker, highlighted a gap between the offerings of existing loan origination apps and customer needs. For example, some apps require a minimum credit score to enroll.
Eliminating requirements such as that will ensure that the app can reach a wider range of consumers who could benefit from its tools at a time when the housing market has been especially difficult for would-be first-time homebuyers. Current homeowners feel locked into their current homes, which they largely refinanced at record-low interest rates during the pandemic. Their reluctance to list has contributed toward inventory levels dropping
Middle-income buyers are struggling the most to find affordable homes. Currently, this group of buyers can only afford 23% of homes on the market as opposed to half of all listings five years ago,
"Low- to moderate-income consumers can often self-select themselves out of the homebuying process, mistakenly believing they cannot qualify for a mortgage," said Joe Mellman, mortgage business lender at TransUnion, which provides credit data to FinLocker's app.
Consumers that do begin to educate themselves on the process often do so through
"If you look at a lot of down payment assistance and grants, there may be a 30-minute or 45-minute course where they get a certificate and have to meet certain attributes for an affordable standpoint," Kouchis added. "But if you have somebody that really hasn't experienced this type of liability, a 45-minute course doesn't create sustainability."
Vieaux added that a high debt-to-income ratio presents a significant challenge for first-time homebuyers, especially graduates paying off student loans. FinLocker's app aggregates liabilities such as these and can outline savings plans against prospective down payments or closing costs.
In a press release, FinLocker CEO Henry Cason said that the fintech's technology allows users to stay on top of their credit using "soft pull," or soft credit inquiry, as opposed to hard credit inquiry. Through the app's credit simulation, users are not exposed to risk of hard checks that can rack up and hurt credit scores.
"I like to call it a sandbox for aspiring first-time homebuyers," said Vieaux.
