One way to keep in contact with your clients and to show that you care about them is to make sure that their mortgage situation is in good shape and that they're not getting in over their head.
With the millions of foreclosures currently happening as well as those looming on the horizon, it's not inconceivable that you may know of someone who has or could lose their property.
Have any of your clients recently taken out a second mortgage, home equity loan or line of credit?
Was their original mortgage a fixed or adjustable rate loan?
For example, if you have a client, who has a 3-year ARM and they planned on re-financing down the road, you may want to have them look into locking into a fixed interest rate now. Many ARMs are going through their interest rate adjustment right now or in the near future. If your clients aren't financially prepared or aren't able to pay the increased amount, they may need to look at re-financing into a fixed-rate mortgage (if they qualify and the fees aren't excessive) or consider selling their property.
There are consumers out there, who have an ARM, option ARM or similar mortgage product and that was the only way for them to get a property. They thought their personal financial situation would cover the future rate increases, but things changed and now they're in a financial mess.
Often times, people are embarrassed to talk about their financial situations and may get behind in payments for a variety of reasons. If you have a client, who's having trouble keeping up with their payments, find out if they've been in contact with their mortgage lender. The last thing they need to do is to keep their lender in the dark about their situation, because their lender will find out and then it may be too late to do anything about it.
It appears that the mortgage industry through the actions of Fannie Mae and Freddie Mac is tightening the regulations concerning certain mortgage products and what credit score is going to be needed for consumers to qualify for those mortgages.
If consumers are considering re-financing to keep their mortgage payments more stable (except for typical increases in homeowners insurance and property taxes) and to get away from an adjustable rate mortgage, that's probably a good idea. But if they want to re-finance to consolidate credit card bills and loans, etc, then they need to make sure that they have the financial discipline not to start charging up the credit cards again. In many parts of the country, housing appreciation rates are not increasing at the rapid rate that they were in the last 5 years, so your clients need to understand that they can't keep re-financing over and over and hope to stay ahead of the game.
There are mortgage lenders out there that will allow consumers to borrow more than their property is worth.... 103% to 125% LTV. I hope these companies go away, but they will probably always be lurking out there.
That's where you need to educate your clients about the pitfalls of taking out too much equity (maybe more than their property is even worth) so that they don't fall into financial ruin.
Inform your clients to contact you when they're considering re-financing. You may be able to recommend several reputable mortgage consultants, who can review their situation and see what they should do, if anything at all. They also need to get a Good Faith Estimate (GFE) from any lender they consider using, so that they don't get any surprises later. Finally, they need to review the final closing documents (preferrably with a real estate attorney) to make sure that all of the fees are what were disclosed in the GFE and that there aren't any junk fees added or any terms to the mortgage and note that your clients weren't aware of.
Also, always make sure that you recommend to your clients to talk with their accountant, financial planner or other advisors to help them determine their options that best fits their needs.
By adding this strategy to your After-The-Sale Service Program, your clients will appreciate you and hopefully refer you more often.
To your success,
Dan
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