Catalina Kaiyoorawongs, founder and CEO of LoanSense, shares her personal homebuying journey and discusses the hurdles she encountered during the loan application process that inspired her to create the rising fintech company.

“We want to equip lenders and loan officers with the tools to automatically inform a borrower. Can they in fact afford and what can they actually afford if they get on the right plan and right-size their student loan”, Catalina explains. Mortgage professionals should not miss this opportunity to learn valuable insight that can benefit you and your customers.

Kristin Messerli: Hi, Catalina. Thank you so much for joining me today. I’m so glad to finally interview you. 

Catalina Kaiyoorawongs: Happy to be here.

Kristin Messerli: You have been on my list of people I wanted to interview for a long time, and I am so inspired by all of the work that you do and just who you are. So, thanks for joining. And, on that note, I want to hear from you about what made you decide to start LoanSense.

Catalina Kaiyoorawongs: Well, it’s a very personal story. In 2015 I tried to go by my first home and I say try because I went to a few different lenders who didn’t respond. And finally the third said, you know, pay down your student loans and come back later. And I was like, Hmm, this house I wanted to buy. What does that mean? When can I pay down my loans by five years? What will this house be worth? And I was just doing all this analysis and I was like, this can’t be right. Right? Like our generation goes to school. We were told we have to go to college. And so I, you know, being a good policy [student] because I studied policy. I wanted to see what the actual rules are and try to understand this process and system. So I started actually reading the guidelines, myself, Fred and Fannie guidelines.

And I found that I could actually change my student loan plan with my student loan servicer. And that would allow my lender to count this new payment as a lower debt to income and thereby be able to afford more house. So I went to my student loan servicer to make this adjustment. I didn’t quite know I was doing it took a few months, but I went back to that lender who sat down with me and explained to the best of her ability and her knowledge at the time I went back to her and I was able to a couple months later close on my first house, not that exact house anymore at that point, but at least I was able to close on my first house. And since then, you know, multiple homes and I thought to myself, how many people, my generation are getting turned away without any solutions or without being told what the possibilities are because their loan officer just did not happen to know. And so I was inspired to start LoanSense out of helping people of our generation that experience the same dilemma. Right? And this goes to the psychological thing we talked about, like on LinkedIn, that I’m happy to address later since it, it made me realize there’s a lot of like psychological aspects to our generation taking on debt and then how they respond to it. Right. And people respond very differently. Yeah.

Kristin Messerli: Yeah, definitely. No. And I think student loan debt, I mean, I think it’s that we have 300% more than our parents did. Like this is a fairly new phenomenon that we’re learning how to navigate in a housing market with prices that are higher than, you know, they’ve raised so quickly. And I think that understanding how to navigate that is extremely stressful. And I’ve had my own personal experience with student loan debt and having partners with extraordinary amounts of student loan debt. That we’re just not, I think it’s not just that we don’t know how to navigate that and build wealth and, you know, go through these other steps. It’s also just extremely overwhelming and stressful. And so you kind of like have that response, that stress, stress response that makes you not really able to even think clearly about a lot of these decisions. So making that easier, I think is extremely incredible that you have made that more accessible, I guess.

Catalina Kaiyoorawongs: Yep.

Kristin Messerli: So according to the National Association of Realtors, more than 50% of home buyers under the age of 36 said that student loan debt delayed their home buying. We also asked that of the NextGen home buyer report and saw that even home buyers themselves said that they were delayed in buying their home due to student loan debt. How do you think that student loan debt has impacted home buyer’s ability to buy?

Catalina Kaiyoorawongs: Okay, so obviously it impacts it because it’s counted as a debt line item. However whether it tangibly affects you, like in an actual way of qualifying versus being a psychological barrier are two different things. Obviously those that have more debt, but earn more you know, there’s different socio. It really depends on how much you earn. There’s some people that earn so much and have a lower amount of student loan balance relative to their income won’t suffer as much. But if you have a higher student loan balance relative to your income, the more it’s gonna impact you. So right now, over 50% of all graduates from grad school specifically, it doesn’t even matter if it’s an MBA, social work, whatever the program is, it could even be like a master’s in art for an exam in like art studies or something like that.

There, it doesn’t matter. The degree more than 50% are graduating with a higher balance than their first year salary. So the higher, the balance is relative to your income, the more it’s going to impact the borrower, but it doesn’t have to because the government has programs that says, if you have an unsustainable payment, if it’s a federal loan, which 92% of all loans are, you can enroll into a program with a more manageable payment and the balance you can’t pay. So let’s say your payment’s a thousand dollars. I’m just using a random number of thousand dollars. The government says you can only afford a $200 payment based on how much you make that $800 difference can actually go qualify towards getting loan forgiveness right now. As it stands, I know there’s a lot of debate in the news, right? But right now you can qualify that towards loan forgiveness.

And now that $800 spread can actually go to help you qualify for a mortgage. Right? But so there’s real barriers for borrowers. And then there’s psychological barriers. And the psychological barrier happens where it’s like, well, I can’t afford it. And they just assume they can’t afford it. And then if they go to a lender who tells them, you can afford it, then there’s trauma responses. Everybody deals with trauma and stress and anxiety differently. There’s the fight or flight response. I’m a fighter. When you tell me no to something, or you confront me, I’m gonna fight you, right. That’s why I’m a founder of a company, but there’s people that have a flight response who won’t even try again, out of fear 10 years later. Right? And that difference in how we deal with trauma affects who buys a home. Really. That’s the crazy thing, because if you’re a fighter, you’re gonna go out and try to find more resources and find information and there’s great resources out there.

But what we at LoanSense want to do is we want to equip lenders and loan officers with the tools to automatically inform a borrower. Can they in fact afford and what can they actually afford if they get on the right plan and right size their student loan. That’s what I like to do, because I wanna prevent declining people, you know, let’s not decline them and then have them feel hopeless, demoralized and feel like, oh my God, when can I actually buy, I guess I’ll just rent, you know? Yeah. So I know that’s probably more than you wanted.

Kristin Messerli: No, it is absolutely everything I wanted to hear because I’m constantly talking about this all the time. That we can’t put our financial decisions over in this other bucket that says that we’re making logical decisions without our emotions. It’s inextricably tied to our feelings, emotions, and experiences. And so yeah, these, the way that we respond to trauma is impacting the way that we are qualifying for a loan or not, you know, or whether we continue to try to move forward. And so I absolutely love that you touched on that. And I think it’s so important that we, as an industry, start recognizing these other components to be able to help people make logical decisions and smart decisions for themselves. So that’s huge.

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