One of the most frequent questions I hear from my Realtor partners is “What’s the best thing I can do to help my buyer’s make the right loan choice?” The answer is twofold: First, it’s not about the rate! and second, only refer the borrowers to qualified mortgage professionals–it’s our job to help them make the right loan choice!

The interest rate is not the most important part of the loan! What lenders sell is a commodity, but that commodity is the single largest debt most of our customers will ever have and putting the borrower in the lowest rate available may cost them thousands more than the loan should (can anyone say “Option ARM?”). There won’t be much difference between pricing on the same loan product from one reputable lender to the next, and the right loan a competitive rate is far better than the wrong loan at a lower rate.

When buyers hear “You should call three lenders to get a rate quote and good faith estimate,” it perpetuates that erroneous myth that rate matters most. It’s so much better for them to hear “You should seek qualified evaluations of your financial picture and choose between the most comprehensive mortgage plan offered to you.”

If a loan officer simply responds to a buyer’s rate inquiry with a rate quote, before developing a thorough understanding of their financial behaviors and goals, the loan officer has failed to meet the borrower’s most basic needs and contributed to the myth-conception about the importance of rate. A qualified mortgage professional will function as a trusted advisor, analyzing short and long-term financial obstacles, goals and opportunities and will structure the mortgage to maximize the borrower’s cash flow, liquidity and tax advantages.

The most professional originators will have the experience to analyze real estate equity and investment returns, cash flow, debt, as well as the financial markets and their impact on rates, and will have an understanding of the sections of the IRS codes most applicable to borrows. Further, the best mortgage professionals will have a comprehensive knowledge of credit scoring and how to work with the borrower to get the most out of the FICO’s–the difference between a 679 and 680 FICO could be $85 per month on a $250,000 home! And finally, in this era where FHA loans now comprise more than 50% of the closed transactions (compared to 12-15% one year ago), it’s also important to work with FHA approved lenders.

Please bust the myth-conception about the importance of interest rate and promote the borrower’s interest in finanical education and wise decision making regarding their mortgage!

Written by Jerra Ryan - Visit Website Sphere: Related Content