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By Rob
Real Estate & Mortgage Broker... Creator of the Sink or Swim Loan Closing System
With
interest rates rising rapidly, it is more important than ever to make
the most of every loan. As
refinances begin to dry up and you begin to deal more with purchases,
you will undoubtedly encounter new roadblocks and hurdles on the way to
the closing table. It’s a
fact--purchase loans are far more time consuming and stressful than
their refinance counterparts.
Borrowers
are emotional, erratic, demanding, panicky, unsure, deliriously happy or
sad and a whole host of many other emotions.
In their minds, they’ve picked out the carpeting and wallpaper
and have mentally already moved in!
Geesh! Try dealing
with a person who thinks they’re the landlord and they don’t even
have the keys yet!!!
Keeping
this in mind, here are some tips when dealing with purchase loans.
These come from my years of experience and many number of loans
(I’ve lost count.)…
1.
Don’t show your hand too early (meaning the interest rate you
can offer). Explain to the
borrower that it is up to them when they decide to actually
“lock-in” the interest rate. If
they press you for an actual rate, tell them what
today’s rate is you can offer, and that you will watch the
interest rates for them. If
they drop, you will call them at the first moment.
What you really want to do here is knock the borrower off their
“rate” short-sightedness. Say
something like, “Well, as you know, the interest rates change every
day. With purchase
loans, time is critical. What
we can do is get the process started, so that you don’t lose the
house, and when the interest rates get to a point you feel comfortable
with, we can lock it in for you. We
will be working hand-in-hand through the entire process.
Now, how do you spell your last name?”.
2.
Explain the difference between a pre-qualification and a
commitment letter. Borrowers
think just because they have been pre-qualified somewhere, that it
guarantees them the loan. This
isn’t the case. As you
know, the underwriter has the final say.
If the property does not appraise for the correct value, the
borrowers’ situation changes, or the seller pulls out, the deal is
dead. These are things
entirely out of your control. What
I tell borrowers, is that we are going to go one step further than a
simple pre-qual letter. We
want to give them an advantage with their loan, and get them a full
commitment letter from a lender as soon as possible.
This lessons the chance of them getting their expectations set
too high and not getting the loan in the end.
3.
Phone the real estate agents early on and explain you are in control of
the process. Call them
BEFORE they call you. You
want to show that YOU are in control—NOT them.
Doing this, puts you at a higher level and they will respect you
for it. Believe me.
4.
Set expectations with the borrower upfront.
Explain the entire loan process from start to end.
First-time homebuyers just simply don’t know.
Emphasize to them, if they have any questions, to call you
first—NOT the realtor.
5.
Make it known that you are the point of contact for all parties involved
in the transaction. This includes the seller and buyer agent, appraiser, lawyer,
title companies, etc. Usually,
the realtor thinks they are in control for the whole process, but
remember the sale is mostly out of their hands after the purchase and
sales contract is signed. Then it is entirely up to you—the loan
officer—to succeed! By
being the “driver” in the process, you can minimize any confusion or
crossed signals that may arise.
6.
If you get a sales call from a borrower looking to purchase a home, ask
if they have already been pre-qualified elsewhere.
Most of the time they have been and are simply shopping around
for the lowest rate. (In
other words, go back to rule number one above… don’t show your hand
too early). If the borrower
shops behind the other loan officer, they will certainly do it to you
too.
7.
Explain to the borrower whether you are acting as a direct lender or
broker. Each has pluses and
minuses. Explain what you
are and the role you play. Sell yourself. For
example, you can say “As a lender, we have direct control of the
process, we make the final decision and can tell you upfront whether you
qualify.” or “As a broker,
if you get denied by a lender, we can easily shop you to another lender,
saving you time and effort. This
will help you ensure you get the house you want and not jeopardize the
process”. Sell
your advantages…don’t mention your weaknesses.
8.
Factor in all payments for the borrower, including the full principal,
interest, taxes and insurance and be certain that the borrower is well
aware of these entire costs upfront.
If they can’t afford the house, you want to know as soon as
possible. Or you’ll be
left with nothing!!! I
always say, it’s best early on to kill ‘em or keep ‘em.
Don’t let timewasters run away with your income.
9.
Watch critical dates, especially rate lock expirations and underwriting
turn-times. Be well aware
of the “commitment letter” date as stated in the purchase and sales
contract on the property. Oftentimes,
borrowers wait until far too late in the process before deciding to move
ahead and these contract deadlines can be impossible to meet.
Get an extension on this ASAP with the seller’s agent on the
property.
10.
Finesse your way through the process.
Don’t lie. Only
tell each individual party involved in the process what they need to
know. Don’t share too
much information…it creates confusion.
And don’t tell someone something unless you are absolutely
certain. It always comes
back to bite you in the rear!
11.
Stop the shopping. Make the
borrower understand that once they decide to move ahead with the
process, they risk losing the home, if they decide to leave you.
Another broker/lender will be unable to meet the tight deadlines
in the contract. They have
to make a decision and stick to it.
12.
Stop the shopping—part two. If
the borrower is qualifying for a home based on a special program that
your company is offering, tell them the criteria upfront.
Not every loan officer has what you can offer.
In other words, you have a specialized program and are making an
“exception” just for them. Not
all rates are created equal. The
other “competitors” for the loan may not have all the correct
information upfront, to be able to properly quote them an accurate
interest rate. Let me
emphasize that again—an ACCURATE INTEREST RATE.
Educate the borrower on this, show them you’ve done your
homework, and are quoting accurately.
Ask qualifying questions that others don’t.
By
keeping these tips in mind, it should make your next purchase loan go a
lot smoother. If you have any other helpful tips, please email me at sales@myloansystem.com
I will share them with my readers in an upcoming issue (with full
credit given to you).
If
you are looking for a firm step-by-step process to help you get your
purchase loans to the table faster, please…please…please…take a
minute to read about my Sink or Swim Loan Closing System at http://www.myloansystem.com
My
simple mortgage system has a special component geared specifically for
“purchase loans”. If you want to continue to earn as much money as you did
during the refinance boom, please read about my system at http://www.myloansystem.com
For a limited time, I am extending the special offer with free
bonus items. Review the
welcome letter, then click on the “order now” link at the top left
hand side of the page to learn more.
And,
as always, best of luck in your business.
This is STILL a wonderful industry to be in!
Stop being discouraged and go get ‘em!!!
I know it’s tougher out there, but you can do it!
Warm
Regards,
Real Estate & Mortgage Broker... Creator of the Sink or Swim Loan Closing System
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