In recent years, there has been a rise in finance influencers—or “finfluencers”—dominating social media.
Legitimate financial advisers, mortgage brokers, and money managers frequently caution clients to be wary of these finfluencers’ advice.
However, that doesn’t mean that some finfluencers don’t provide valuable insights, particularly for first-time homebuyers.
You simply need to learn how to distinguish good advice from bad. Below, experts share their insights on how to do just that.
What is a ‘finfluencer’?
A finfluencer is a person who can influence the financial decision-making process of others through social media.
TikTok’s hashtag for its financial community, #FinTok, has garnered more than 4.7 billion views, according to CNBC.
However, not everyone is a fan—including certified financial planner Filip Telibasa, owner of Benzina Wealth in Sarasota, FL, who warns his clients to be wary of finfluencers.
“The claims made in social media posts do not necessarily represent all of the facts,” says Telibasa. “In other words, all of the variables and assumptions are not properly disclosed and therefore skew the picture being painted by the influencer.”
Why you need to vet finfluencer advice?
Since social media platforms don’t vet these finfluencers, anyone can claim to be an expert on anything.
“This is why you should do your research on the actual person you are consuming the data from,” says Jose Tejada, vice president of mortgage lending at Rate.com. “Do they have professional licenses and are they actively practicing? It’s a good practice to listen to several points of view on the same topic from different content producers.”
Doing your due diligence is more important than ever, since 38% of Gen Zers receive financial information or advice from YouTube and 33% receive it from TikTok.
If you don’t vet finfluencer advice, “you could act on bad advice or pass on bad advice and impact a family member or friend,” warns Tejada.
According to mortgage loan officer Charity Mathis, of Flat Branch Home Loans in Joplin, MO, many people assume they won’t qualify for a mortgage based on advice they get on social media. However, if they actually sat down with a mortgage broker, they’d realize that’s simply not the case.
“I can’t tell you how many times I have given either a plan of action or a prequalification, and had individuals tell me, ‘I never thought it would be possible to buy a home,’” says Mathis. “Every loan I do is different—it’s not a one-size-fits-all. That’s why I think it’s always best to talk with a local lender, rather than blindly trusting a finfluencer.”
4 tips from finfluencers about your mortgage that are spot-on
Although some finfluencer advice on social media can be questionable, it’s not all without merit.
“There are certainly value-add finfluencers you can learn from,” says Tejada. “The key is sorting who is an actual expert on the topic and who is pushing out an opinion.”
Here are a few examples of finfluencer advice that are actually on the money.
Finfluencer advice: Pay off your mortgage early if you can. It will save you tens of thousands of dollars, or even hundreds of thousands of dollars, in interest.
Why it’s good guidance: “I’m a fan of the asset, the house, but not a fan of the debt,” says Bill Westrom, credit line banking CEO and founder of TruthInEquity.com. “Mortgage debt is not ‘good’ debt. It is very expensive debt from Day One because you’re paying interest on an often large six-figure balance from the first day. Warren Buffett, Mark Cuban, and many of the wealthiest people in the country have the same financial advice for regular folks: Pay off debt.”
Finfluencer advice: Just because you make a big salary, you can’t assume you’re a shoo-in for a big mortgage. Salary isn’t the only thing taken into consideration when qualifying for a loan. In some instances, a person with a $150,000 salary could not qualify for a $400,000 house. (It all depends on the debt they have and where they are buying a home.)
Why it’s good guidance: “A $150,000 salary with no consumer debt and good credit will easily qualify for a $400,000 house,” says Westrom. “But if consumer debt does exist and if those monthly payments—including the new mortgage—exceeded 45% of their gross income, this person would not qualify for the mortgage.”
Finfluencer advice: Before locking in your interest rate, ask your lender if they offer a mortgage rate lock float-down. That way, if interest rates fall before your loan closes, you can take advantage of the lower rate.
Why it’s good guidance: “Some lenders offer a rate float-down option, allowing you to lock in a rate and still take advantage of falling rates before closing,” says property and finance specialist Austin Rulfs. “These options, however, often come with bans or additional fees. It is prudent to understand the terms of your rate lock before signing any agreements.”
Finfluencer advice: If you don’t have any established credit, don’t count yourself out—you can still get a mortgage with a “no-score” loan.
Why it’s good guidance: “No-score loans are built for those with zero traditional credit history,” says Rulfs. “Creditors might use substitute data, like rent or utility payments, to assess risk. Loan approval is then made harder because interest rates are higher due to increased risk.”
