Use Both Sides of Your Balance Sheet for Mortgage Lending

Do you remember Accounting 101? The balance sheet is a basic concept. On the left, we have assets. On the right, we have liabilities and equity. Debits must equal credits. Assets must equal liabilities plus equity. A mortgage loan is an asset. It’s something that is owned and has value. It sits on the left side of the balance sheet. But what about the right side? We don’t use that in mortgage lending.

But what if we did?

Perhaps there is an opportunity to do something cool, something unique, something memberlicious for those members who want to be home owners. That opportunity might just exist thanks to the changing mortgage landscape. The low down payment loan may soon be a thing of the past. Fannie isn’t going to buy 97% conventional loans. And FHA upfront and monthly premiums have made the loan less affordable for borrowers.

If we can’t loan members all the money they need to buy a house, how about Credit Unions step up and help members save better and faster for a bigger down payment so they can get a conventional mortgage?

What could this look like?

For years, Credit Unions have offered Christmas Club accounts, and at least at my Credit Union, lots of members still use them. The account is a great way for members to save for Christmas expenses throughout the year and avoid that whopping credit card bill in January. Could this strategy be translated to home ownership?

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