By now, brokers and borrowers alike are very familiar with the benefits of a 30 year fixed mortgage. Most of us cling to this structure because we perceive it as safe. It’s what our borrowers have heard about their entire lives. Their parents had 30 year mortgages, and their parents before them. The housing market crash certainly did not reflect well on the mortgage industry as a whole, let alone on some of the more “creative” financing options.
But with the new laws and structures in place, why are we as mortgage professionals still afraid to offer our clients anything but those stiff, dime-a-dozen 30 year fixed mortgages? Especially when they may not always be meeting our borrowers’ needs. When I first started originating, I often feared that if I so much as mentioned an ARM or anything other than the status quo, my potential client would head for the hills, never to be heard from again. It didn’t take me long to realize that I was selling myself, and more importantly, the client, short.
It’s important for us to remember WHY borrowers are so hung up on their cookie-cutter mortgage. They aren’t the professional. They’re afraid. They’re afraid of horror stories they’ve heard from the guy who sits next to them in the office. They’re afraid to not take advice from friends and family. Most of all, they’re afraid of being taken advantage of, or making the wrong decision.
Which is why offering them options is not only going to set you apart from your competition, it’s going to help you provide the best possible solution for your client. Keeping in mind that most people only stay in their mortgage for about 7 years, are you really listening to your client when they tell you what they’re looking for?
A couple comes to you asking about the rates on a 30 year mortgage, as they are looking to refinance their home. In talking to them, you come to find out they intend to grow their family and find somewhere a little more spacious sometime within the next ten years. They’ve already spoken with their bank, who quoted them a pretty good rate on a 30 year fixed. They’re shopping around only to make sure that they’re being quoted a good offer. They trust their bank to make the best decision for them because well, they’ve been banking with them forever.
This is where brokers can shine, and prove their value over banks and big-box lenders. Take the time to run the numbers and possible scenarios. Could a 7/1 ARM be a better option for these folks? What about a 23 year fixed-rate mortgage that allows them to lower their payment, without resetting the clock on their term? Work up the figures for several different options, and discuss them with your borrowers. Show them the risks and benefits of each possible solution. Offer your opinion. Talk to them like you would talk to YOUR family if they were in the same scenario. Their bank may not have taken the time to truly HEAR these people. They may not have bothered to dig deeper into your clients’ actual scenario if they were confident they’d be getting the deal.
At the end of the day, it doesn’t really matter what option the borrowers choose to go with, as long as they feel well-informed and comfortable with the decision that they are making. The more you show them how much you care, the more value they see in working with you. YOU took the time to ask them personal questions about themselves; their financial goals, their family plans, what they’d like to do when they retire, and what it would take to get them there. You cared enough to take a few extra minutes to draw up alternative options, to compare the scenarios and show them the possibilities. You didn’t take them for granted and assume the sale, like their bank might have.
Not only do you make yourself the clear choice for THIS deal, but you establish the kind of credibility with these borrowers that makes them want to refer you to friends and family. It could be that you just turned one deal into three; and it cost you nothing but a few extra minutes of your time to explore different avenues with your clients.
Don’t sell yourself or your borrowers short by not taking the time to stroll down Possibility Lane.