Taylor Morrison sees value in offering buyer education – with no strings attached
The excitement of buying a new home can be exhilarating, with decisions to be made on floor plans, colors, and fixtures. Decisions about the mortgage – a necessity for most homebuyers – can be much less interesting.
That’s something Taylor Morrison Home Funding, the mortgage arm of national builder Taylor Morrison, wanted to change. In 2011, when the housing market was near its bottom and qualifying for a mortgage was especially tough, they created ARO — Able, Ready, Own — a program to educate buyers about mortgages.
Some buyers had been through bankruptcy, foreclosure, short sale, job loss, or another negative credit experience and were unsure whether they’d be able to buy a home again. ARO provides direction and improves their chances for qualifying, says the company.
Filling a Void
The idea for ARO came into focus when visitors to Taylor Morrison’s new home communities hesitated to engage in purchase conversations because they felt they wouldn’t qualify for a mortgage.
From those conversations, ARO was born.
“It’s a department truly based on qualification improvement; it’s not credit repair,” says Tawn Kelley, president of Taylor Morrison Home Funding. “We have three full-time employees with professional training in credit who counsel and advise customers about their specific credit profile and what is reflected in their credit report that is influencing their credit score,” she says.
“The customer learns what impact their credit score has on their ability to qualify for a mortgage and what if anything they can do to improve their profile.”
How ARO Works
The mortgage company uses a credit score simulator through CoreLogic to help borrowers understand their credit score and how to improve it. Issues for discussion and possible action include erroneous information, late payments, the number of credit inquiries, and high credit card balances, among others. With that information, the customer receives a personalized path and direction to improve their credit.
“We felt like it was a useful way to spend time with our prospects that were seeking solutions and a strategy to overcome their past,” Kelley says. “It gives us the ability to serve that customer and eventually put them into a position to be able to buy a home.”
“When their credit score improves or they meet the requirements of a mortgage product they are given a graduation certificate, and many come back out to the community to buy a home with the confidence that they can obtain a mortgage and close on their new home,” she adds.
Since its inception ARO has assisted 1,128 buyers, resulting in $306 million in home value purchased. Participants spend an average of 75 days in ARO, and on average their credit score is improved 43 points.
And when it comes to credit scores, every point counts.
“The number of points gained on the credit score can improve the interest rate offered,” Kelley says.
Success has been sweet.
Unlike some credit repair programs, ARO doesn’t charge any fees, nor does it promise improved credit, says Laura Kunzweiler, vice president of CORE Fulfillment, who oversees ARO. It doesn’t require ARO participants to buy a Taylor Morrison home or to fund their home purchase through Taylor Morrison Home Funding.
Instead, Taylor Morrison Home Funding says it educates and advises via ARO as part of their overall service offering.
About half of potential homebuyers enter ARO to improve their credit enough to qualify for a loan while the other half have qualified but are hoping to get better loan terms.
“ARO has exceeded our expectations and continues to be a valuable service long after the initial downturn that effected so many consumers,” Kelley says. “Nothing is better than helping someone purchase a home when they thought they could never qualify again or who thought they would have to accept unfavorable mortgage terms.”