I don't understand why many in my industry can't grab onto the "Power of Truth" and the need to understand a clients' needs! I have received several new calls this week from new and potential clients that are looking to refinance their homes from their once "all time low" payment to an increasing shocker. The trend is happening across the country. But, before I decide that it is the proper time to refinance, there are a few things to take into consideration.
1.) Is there a prepayment penalty on the home?
I brought this to a potential clients' attention and he said that a few other lenders told him "not to worry about it, it can be paid for through the loan!" Wow! I coultn't bring myself towards trying to sell a person on refinancing now, when they could save themselves 6 months worth of interest in prepayment penalties by doing the loan 3 or 4 months from now! Have patience with your clients and have their best interests in mind! Don't make an offer, simply to get business through the door!
2.) How long does the borrower plan on being in the home?
Sure, a client may be on an adjustable rate product...But if it expires in 2 or 3 more years and they plan on living in the home for only a few more years...why bother? For rate and term that is...If there is a need to cash out, then fine. But to refinance their home to a fixed long-term loan when they are surely going to have a larger payment simply doesn't make sense.
3.) Closing costs and break-even periods?
Do the math! Don't simply rely on your computer program. Analyze the loan out for your clients. Does it make sense for them to pay points? Does it make sense for them to "buy down the rate?" The key is to ask questions and have a full understanding of what their goals and objectives are. Not yours...
I have built a strong referral base off of offering truth and seeking to understand my clients. If I don't think they should do the deal...I tell them.
By seeking to understand their gameplan, we can help them to make the right moves.
In the end, it's simply better business for you and your clients!
Seek Win-Win relationships :)
Scott Gormley
Broker/Owner
Oak Valley Mortgage
2006 Chico Assoc. of Realtors Affiliate Chairman
Direct: 530.592.8362
Fax: 530.267.5555
Website: http://www.CALoan.com
Blog: http://www.CALoanBlog.com
"You find the perfect home, we'll find the perfect loan!"
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