“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

Don’t wait any longer to ACCESS Mike White’s Exclusive Content that will forever change the way that you do business, visit http://www.imtcoaching.com

“Grow Up”

The election is over and for some reason, a small part of our country has made a choice to whine and complain how things didn’t go their way. SERIOUSLY? Never before in the history of the Republic did universities have to take a time out, cancel classes and exams because their students needed emotional support animals! As I have said for years, giving children participation trophies would lead to an entire generation that was weak and undisciplined. Well, here you have it. We have people crying because they lost an election and showing their displeasure by blocking traffic, assaulting people, and causing millions of dollars in property damage. Yes, I know the pain of losing. I also know that you get up and go back to work. You congratulate the other side for their efforts and work harder to do better. Unfortunately, that isn’t happening for a small minority of people; the people who have a really distorted view of the world. The election is over and a new administration will take over in January. We ALL have a need for the new group to succeed, because we ALL live in this country and want it to do well. Anyone that ever wished for any new administration to do poorly; only wishes harm to themselves.

The mortgage point to all of this is that I have to caution all the idiots who are screaming about the collapse of the mortgage and real estate industry! Are you all insane? What, interest rates go about 4% and that’s it? Are you kidding me? The country has had artificially low rates for years and all that has happened is a sluggish economy where people can’t find growth. Higher rates are being triggered by OPTIMISUM in the stock market that the economy is going to get BETTER!!!

A thriving economy can certainly cause our artificially low rates to NORMALIZE! In fact, higher rates are actually a GOOD thing. Higher rates provide better returns for those bond investors, likely those on fixed incomes. In fact, for many years traditional savings accounts hung around the 5% mark. Higher returns on cash isn’t all bad!

Yes, higher rates cause higher payments. But have you taken the time to get past the emotional trigger of higher rates and just done the math? Yes the payments are now a little higher, but will that slightly higher payment really prevent people from buying a house? Come on, get real with it. If payments going up $20 to $100 a month really stop someone from buying a home, how are they going to deal with RENTS GOING UP EVERY YEAR?

Anyone that is that tight on payment shouldn’t be borrowing that much money in the first place. A vast majority of borrowers don’t borrow anywhere near the amount of money they would be approved for. And besides, you think home prices and rates are going BACK DOWN? Guess again!

My career began in a 15% rate market. For many years I wrote loans that were double digit terms and there was no shortage of business. Rates broke below 10% and kept going down. People were happy as they got deals at 8, 7, and 6%! We also know an entire refinance industry was born. Now I get that for some people, refinances are a significant part of their business. I also understand that I have been telling people to be certain they had a business model with no less than 70% purchase business because at some point, refinances were going to go away.

So for all the experts out there, who are forecasting the end of our industry, just grow up! Yes, higher rates are not as pleasant as lower rates are, I get it; but it doesn’t mean people aren’t going to buy homes. In fact, given all the complaints about limited inventory and too many buyers chasing too few homes, maybe higher rates help settle the markets and help us find a more “normal” environment?

Interest rates were going to go higher at some point. Isn’t it better that they go up because the markets are expecting a stronger economy with great growth, than because we have a stagnant economy with runaway inflation? So everybody take a deep breath. Yes, rates are higher. Yes things will cost a little more. But as professionals we have to get clear about the real costs and provide solutions to the challenges at hand.

So do the real math. Brush up on you adjustable loan products. Remain calm and understand that sometime you win and sometimes you lose. If you won, congratulations and I hope you are happy and your team does well. If you lost, congratulate the other side and hope they do well. If you are part of the half of the country that didn’t bother to vote, shut up! You didn’t participate; you have nothing to add to the situation! The sun always rises in the morning. Be happy about that and make the best of it.

Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com