When are interest rates going to come down? Where should mortgage rates be before I buy or refinance my home? How much home can I afford today? These are just a few of the questions independent mortgage brokers get asked on a daily basis.
The reality is, borrowers are rate sensitive because it’s what they’re exposed to. Mainstream media often emphasize fluctuations in rates, which causes uncertainty and apprehension among borrowers. Furthermore, the average consumer is likely unaware of the variety of loan options available to them through the wholesale channel. This is why it’s more important than ever for independent mortgage brokers across the country to establish themselves as an expert and trusted advisor in the mortgage industry.
However, to do this, consumers need to know and trust that you’re the expert before they’re even going to consider you. So how do you build that trust and credibility? And how can you confidently talk to clients and potential clients about their mortgage needs?
First, you need to establish trust and credibility. A mortgage is one of the biggest financial decisions someone makes in their lifetime. It can also be quite emotional and stressful. If they view you as someone who doesn’t know what they’re talking about, or someone who just wants to get a commission check, you’re not likely to get their business, or if you do, it’s unlikely to result in any future or referral business.
Trust starts with your online presence. The way you present yourself across digital platforms can make or break that first initial layer of credibility. When’s the last time you made a purchase or did business with someone without Googling them or checking reviews first? You need to make sure everything that comes up when someone Googles your name or business makes a good first impression, whether that be your social media or Google Business Profile.
Once you get a borrower in the door, continue building trust by building a relationship with them. Your conversations with clients should extend beyond mortgages. Get to know them on a more personal level. Do they have kids? Are they passionate about their job? What about sports? Find something to connect with them on and extend the relationship past the transaction.
Breaking down the misconceptions about interest rates
The big question we’re all getting is, “When will interest rates come down?” As much as I would love to have a definite answer, I don’t, and no one else does either. Realistically, it could happen tomorrow, two weeks from now or six months from now. Rates are something we can’t control, so instead of trying to time the market, focus them on what you can control — finding the best option for your borrower that meets their expectations today.
When borrowers ask you about mortgage rates, you first need to understand why they’re asking. The consistent media chatter and click-bait headlines around mortgage rates have caused hesitation among consumers when it comes to buying, selling and refinancing. It’s up to you to shift their mindset from just the rate to the overall financial goal for their mortgage.
Are they looking to save money on a monthly basis? Do they need to tap into their equity to pay off other debts? Do they want to pay off their mortgage faster? Are they interested in buying, but worried about down payment and closing costs? Once you have a better grasp on their goals and financial situation, you can make a recommendation and work through the best option together.
For example, say you have a borrower who is living paycheck to paycheck. After reviewing your product offerings, you find a refinancing option that could save this borrower $80 a month. To you, that may not seem significant, but for this borrower, that $80 could make a huge difference. If they refinance, they also won’t have to make the payment until a month after the loan closes, which could provide some additional relief. The reality is most Americans have $1,000 or less in savings, and they are unaware of the savings options that may be available to them through a refi.
Let’s take a look at a fast-track borrower. This borrower wants to pay off their mortgage faster. After looking at their budget, you can determine what loan is best for them, and give them some options. If resetting their term is an issue, maybe use a flex term loan. If they’re able to make a higher payment, perhaps a 15-year or 20-year loan would work. Once a borrower is open and honest with you about their goals and financial expectations, you’ll be able to give them options that make sense, and together, move forward with a plan of action.
When you change the focus from rates to financial goals, you’ll be surprised how much more productive a conversation can be with your borrower. It’s also important to keep in mind that what works for one borrower may not work for another, but the key is to dispel their misconceptions and concerns and present them with options they may not even knew existed.
Becoming the expert
You have to know the ins and outs of the products you can offer your clients. Touch base regularly with the account executives at your lenders and make sure you understand the variety of offerings that are available to your clients. Read up on industry news every day. Connect with others in the industry and share best practices.
Become the expert so you can confidently help your clients with their questions about mortgages, interest rates and the market. That, paired with strong relationships, will take your business to the next level.
Alex Elezaj serves as chief strategy officer at United Wholesale Mortgage. Before joining UWM, he was CEO of Class Appraisal.