Do your clients understand their financing options?
January 31 2019
It’s no surprise that many buyers start their home search with misconceptions about the mortgage application process -- especially first-timers. It’s in your clients’ best interest, as well as yours, to offer guidance when possible.
Recent studies conducted by PenFed Credit Union and Freddie Mac have identified the most common financing assumptions among buyers. Here are four that you should aim to educate your clients about.
Assumption 1: It’s not necessary to shop around for a mortgage.
Even with rising interest rates, two-thirds of homebuyers only request one quote.
What Clients Should Know: Eighty percent of borrowers who reviewed one additional quote saved upwards of $2,000 and those who requested five quotes saved up to $3,900.
Assumption 2: The lowest rate mortgage is the best one.
Unfortunately, 44 percent of homebuyers think the lowest rate is the best option.
What Clients Should Know: Factors like closing costs and the APR of the loan should also be considered. Additionally, working with a trusted lender can offer peace of mind and a smoother financing process.
Assumption 3: ARMs are risky loans.
Fifty-eight percent of survey respondents believe that ARMs are for risk takers.
What Clients Should Know: A 5/5 ARM offers a fixed rate for the first five years and often has lower payments than the typical 30-year fixed-rate mortgage, making it an excellent option for buyers planning to move within five years.
Assumption 4: Prequalification and preapproval are the same.
Thirty percent of buyers think they’re the same and 22 percent were unfamiliar with the differences.
What Clients Should Know: Preapproval puts financing at a buyer’s fingertips and can make their offers more attractive to sellers.
Referring clients to your trusted mortgage partners could help them save money -- a great way to show your value and build stronger client and referral partner relationships.
Have questions? Reach out today.