“Rates, rate locks, and speed!”

We had a conversation about the rising interest rate market and how to educate and inform your clients and referral partners. Many of you have taken the information and done a great job sharing and informing. You will see that in the long run, it pays to be a resource and a trusted advisor when it comes to important information.

One of the strategies I have been sharing with my clients is on how to position what you do and how you do it as a system of value! We often talk about rates as if they were static. They are not. We also talk about rates as if they were all the same, they are not. We also have to combat the price shopper who saw a rate on the internet that is either, old, non-existent, not a product they are eligible to use, or a just plain LIE!

We need to have perspective and share one of my favorite sayings: “The rate isn’t great if the closing is late!” or, “There is no great rate on a loan you can’t close!” Either way, information is the only path. So a simple solution is to educate on speed. Why is speed important? Because it gives you options, leverage, and negotiating power! It can also save your client money!

I have long advocated doing a full document pre-approval on all clients before they begin the process so they are as strong a potential buyer as can be. Sometimes your client or your referral partner can get an offer accepted over others, just on the strength of the pre-approval! It happens on a regular basis for many of my clients that their offer was accepted even though it wasn’t the highest offer, but the surest offer!

In addition to that leverage, we also can share the benefit of speed to both the buyer and the seller. Looking at some rates sheets from various markets, we have a very real cost in the term of a rate lock. Originators and managers are very aware of the cost of these rate locks, but do we share this information with our clients and referral partners? But what if we did? What if there was a way to show that speed can save everyone money? The answer lies within the cost of time! In our case, the days we need to lock the loan in time to close!

We always have to balance the rate on the yield curve to the cost and to the amount of time you need that rate locked for! There can be a wide range of pricing in the same rate over different time frames. Generally, the longer you need to hold the rate and cost, the more expensive it can be. In today’s volatile market, awareness is really important. The cost of time is real. Your ability to close quickly can save your client, and even the seller real money on their loan pricing!

So work with your clients and their Realtors® to share the importance of time! Clearly your market conditions and terms of the transaction have a great deal to do with how quickly you can close! Inspections, Appraisals, Title, HOA documents and approvals, and other factors are all part of the equation, but nailing down to how quickly YOU can get your process completed can clearly set you apart from your competition!

Using the “Rate lock strategy” is something you can do today that will improve your tomorrow!

Questions or comments: Mike@IMTcoaching.com

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Simple Strategies for Today!

So many complicated discussions in our industry about the markets, their effect on home buyers and the Realtor® relationship and how to find, cultivate, and secure great relationships with the better producers. Sometimes people are acting as if these ideas are somehow “new” to the industry. For years I have pushed using simple strategies to generate opportunities for both you and your referral partners, now is a time to revisit a couple of those simple strategies that will help you generate transactions, and provide opportunities for your Realtor® referral partners.

“The Forever Home Strategy®” is a very simple strategy that works in every market to generate listings, purchases, and refinance opportunities. Like all of my other simple strategies, it requires a little planning and a little bit of work. The best part is, you can go to the exact places you want to do business in and focus on the homes that work best for you and your agents.

Key factors are:

  • Selecting the neighborhoods that work best for you.
  • Work with your agents in advance to understand that price point.
  • Know the difference in value over the last five or so years.
  • Target current homes for sale in trade-up and trade-down communities.
  • Use the combination of Personal, physical, and electronic marketing to communicate your message.
  • A minimum of two hours once a week for 4 to 6 weeks of committed time for you and your agent.
  • If people want to move, list their house and find them the next one. If they are staying put, refinance them if they benefit from a change in term, rate, or to remove a HELOC.

“First Time Home Seller Strategy®” is along the same path as the Forever Home Strategy®, but in this case we focus on the typical first time home buyer homes and neighborhoods. We work with our Realtor® referral partners to comb specific properties, communities, and our past closed clients to find our targets. We can even search our company or branch records for those houses sold that fit the criteria that were sold and financed by others to be part of our group.

Key factors are:

  • Identifying specific targets so you have a minimum of 60 – 100 targets.
  • Follow the same criteria as above to identify past cost, current value, and the VALUE of an additional bedroom or bathroom for the difference in the monthly payment.
  • Buying now before the price and cost of the transaction goes higher!
  • Capturing a rising market from a higher value home.

Both of these ideas are gone through in detail on the website as part of a “Lunch & Learn” segment, a “Power Partnerships” segment, or a play from “The Coaches Playbook”. Having “ACCESS” to the tools is simple and a very minor investment in your business!

Using the tools in the website is something you can do today, that helps improve your tomorrow! www.IMTcoaching.com

Questions or comments: Mike@IMTcoaching.com

“Rising Rates Require Reassurance”

For those of us who have been around a while, rising rates are something we have learned to deal with. For those who are in the business a while, we have been through these kinds of shifts before. We had a similar drop in February of last year. In fact, we are only about 1/8% higher in rate year over year. While a 350+ basis point drop isn’t fun to deal with, from September of 2016 to December 2016 we had a more than 400 basis point drop in MBS markets. Certainly looking back to May of 2014 and April of 2013 you can see even more drama in the MBS markets. The key here is to not panic and reassure people that the world isn’t coming to an end. Yes we are not in the 3% range any longer, but neither are we at 17%!

The interest rate markets can certainly become an emotional roller coaster. We are dealing with a number of factors, any one of which could move the markets, when put together, can really cause some significant pressure! Let’s look at a few things we can share with our clients and referral partners.

  • Higher rates aren’t all bad. Much of recorded history shows us that more “normal” 30 year rates are between 6% & 8% than between 3% & 4%. So 5% certainly isn’t the end of the world, more likely the beginning of the next chapter.
  • The Federal Reserve reducing MBS purchases are also putting pressure on the supply and demand of both MBS & US Treasuries. In October 2017 the Fed reduced MBS purchase by 4 billion dollars a month. In January they reduced to 8 billion less. In April they will reduce by 12 billion, and so on until they get to a reduction of $20 billion dollars LESS then what they were buying just a year before!
  • The new tax plan puts more money into the economy and brings more investment by companies and higher wages and bonuses. This could also help push rates higher a little to correct for possible inflation.
  • A weaker dollar can also put pressure on rates as foreign have to deal with the currency exchange rates as well as yield.
  • Shorter transaction turn times mean shorter rate locks. Shorter rate locks save money!

So yes, higher rates are an issue, just not as big an issue as some would have you believe! The housing market is still very strong. New household formations are still higher than new homes being built. In fact, about 80% of new households are renters! That pressure on rentals will certainly help keep home ownership as a truly exceptional investment. Renters spend money on time. Owners generate equity over time, leveraging their down payment over a much larger asset.

Take the time to pull up charts and graphs to show people what is happening. Share with them a long term view. Share how rising rates are something to watch, but they don’t preclude a still great investment! In fact, have your people to ask their parents and grandparents what the interest rate was on their first mortgage? I will bet you that many had rates higher and much higher than they are today. It’s also likely that rates will continue higher into the future, so today’s higher rate is tomorrow’s great deal! Share with them how your system of pre-approval helps speed the process to 30 days or less! Shorter turn times equal shorter rate locks!

Buying a house can be a very emotional process. Dealing with money and loans can be unsettling as well. As a mortgage professional, it is up to you to provide solid information so your client can feel comfortable with the choices they make. While the rates today are not at all-time lows; they still represent a great value on the big scale of history. Be certain you are clear and accurate with the information. Show them how rates translate into payments. While we don’t control the markets, we do control how we react to the market. Professional and steady; clear and informative!

Questions or comments: Mike@IMTcoaching.com

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“Mastering Monday”

My experience in the mortgage industry has taught me a few things that seem to hold true across all markets in all price points; Master Monday and the rest of your business will fall in line! Regardless if you are new to the business trying to get started, or a seasoned veteran with a growing practice, the art of Mastering Monday is the key. The failure to understand how, why, and what to do on Monday can often be the difference between gaining traction or quitting, growing your practice or becoming stagnant in the same place. In any case, Mastering Monday will go a long way in providing you with a weekly focal point and can dictate how and what adjustments you make to your practice each week.

Monday is a day of following up with opportunities. Monday is a day of collecting. Monday is a day to chart a result and schedule the future. Monday is a day to talk to people you know. Nobody has time in our business to deal with cold calls on a Monday, at least not the people who it is important to know! If it isn’t a warm call, then don’t make it on Monday!

For new originators trying to get started in the business, Monday morning is the time to check and see who called in or any referrals you received from having worked open houses over the weekend. If you are new to the business and aren’t spending time on the weekend hitting open houses and connecting with agents, sellers, buyers, and neighbors of those open houses, you are likely missing a golden opportunity to establish yourself in the business with the people you need to know, as well as creating instant loan opportunities. Once you have cleared the messages, it is time to write the personal notes to those you met and the sellers of those open houses. Last, schedule your follow-up calls with the agents you met over the weekend for after lunch, agents are busy putting together deals on Monday morning, respect their time!

Established mortgage professionals on the other hand, need to be making “collection calls” on Monday morning between 10am and noon. Every agent you have established yourself with gets a call to ask, “Who did you meet over the weekend that I need to talk too?” Making these calls is vital to your established relationships because they are in the middle of putting deals together and now is the prime time to get in front of all the opportunities they have established.

Monday is also a time you can expect a lot of new contracts, inquiries for pre-qualification, and a number of referral partner calls asking for help structuring deals, so be careful not to over book Monday with activities or events and plan for the fact that you may have to work a bit of overtime on Monday when all good things come together at the same time! If you are established in the business and Monday isn’t a busy day, you need to check what you are doing to prospect because it should be! As an established originator, you need to be prepared for every referral partner to have a lead for you to follow, and for every pre-approval to have gone into contract!

Mastering Monday can make all the difference in your business. Knowing what to do is almost as important as what NOT to do! Budgeting your time, triage your work flow, control the process, and managing your opportunities can turn chaos into close loans!

Questions or comments: Mike@IMTcoaching.com


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