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An Old Type of Mortgage Is Back in Style. Is It Right for Your Clients?
It's not an easy time to buy a home. Interest and mortgage rates are rising, the number of listed houses is at an all-time low, and continued demand for homes means that prices continue to go up. Cue the reemergence of the adjustable-rate mortgage. The proportion of mortgages that are adjustable-rate mortgages (ARMs) more than doubled to 10% in January 2022, up from only 4% in January 2021. Increased interest in ARMs is no surprise, as they offer an initial rate that's significantly lower than a standard 30-year mortgage. But what's the catch for buyers? After all, ARMs were last this popular in the lead-up to the collapse of the housing market in the late 2000s. As an agent, when should you recommend an ARM, and when should you advise clients to stick to a traditional mortgage, even if it has a higher rate? How Does an Adjustable-Rate Mortgage Work? As ARMs occupy a larger share of approved mortgages, buyers are more likely to be familiar with them as a strategy to lower their initial rate. What buyers may not understand is that after the initial period – sometimes called a "teaser rate," which typically lasts between three and 10 years – their interest rate and monthly payments fluctuate. ARM rates are tied to a major index, such as the maturity yield on a one-year Treasury bill or the Secured Overnight Financing Rate. After the initial rate expires, mortgage lenders take the index rate and add a pre-agreed number of percentage points, called the margin. The margin stays the same, but the index rate fluctuates, and is out of your and your client's control – though ARMs do come with a cap that insulates buyers from steep increases in monthly payments. The most popular adjustable-rate mortgage is the 5/1 ARM – which means that the introductory rate lasts for five years, and the interest rate changes once every year thereafter. Let's see how one looks in practice. Your buyer needs to take out a $400,000 loan to purchase a home, having put an $80,000 down payment on a $480,000 property. A standard 30-year mortgage, which is known as a "fixed rate," currently comes with about a 5% interest rate. Under this circumstance, your buyer would pay $2,147.29 every month for 30 years – adding up to $773,024.40 total over the course of the mortgage. Under a 5/1 ARM, your buyer may be able to secure an initial, five year rate of about 3.5%. Over the first five years of the loan, they would pay $1,796.18 per month, which adds up to $107,770.80 – $21,067 less than the $128,837 they would pay with a fixed-rate mortgage. After this, things get more complicated. While it's possible that interest rates could be lower in five years, most experts consider it unlikely, as the Federal Reserve has announced and begun to implement an aggressive rate hiking schedule to combat inflation. Even with a relatively low first-time adjustment of 1% and a favorable interest rate cap of 8.5%, monthly payments on this 5/1 ARM rise to a maximum of $2,817.96 per month. Overall, total 30-year payments on the 5/1 ARM would be estimated at $928,320, a full $155,296 more than a traditional, fixed 30-year loan. When Does an Adjustable-Rate Mortgage Make Sense? Clearly, adjustable-rate mortgages combine short-term gain with long-term risk. Your buyers can save money in the early stages of a home loan, but could be stuck with unfavorable, or at least unpredictable, mortgage rates for the brunt of their mortgage. Whether an ARM is a sensible, responsible option depends entirely on the buyer's circumstance. The first type of buyer most advantaged by an ARM is somebody who doesn't plan on living in their home for long. If your buyer indicates that they plan to purchase and then sell their home in five years or less, an ARM will allow them to bank savings without worrying about the fluctuations of mortgage indexes. In this vein, ARMs are a more normal option for people purchasing a "starter" home, because it allows them to build equity and pocket cash in advance of a more expensive home purchase. For buyers who feel squeezed out of the red-hot housing market, ARMs can be an avenue to qualifying for a larger home mortgage. Some of these buyers may anticipate having a higher income in the future, or believe they will be able to refinance their mortgage later on when interest rates drop. These buyers have a higher tolerance for risk, and as long as you explain the potential downsides, opting for an ARM can be a reasonable option. An ARM does not make sense for buyers looking to secure their "forever" home. For example, consider a married couple in their 30s who tell you they are searching for the home in which they will raise their family. They inform you they do not plan to leave this home for decades, and have settled, stable lives and careers in your local area. For such buyers, an ARM would be a resoundingly poor choice. Instead, encourage these clients to pursue a traditional 30-year fixed mortgage, because it will afford them security and clarity. ARMs are a similarly poor fit for buyers who have a low down payment, because a market correction and decreasing home values could leave them with inflated debt on a less valuable investment. Also, buyers who are purchasing a modestly priced home, especially those under $200,000, will only yield $100 or less per month during their initial ARM rate. Those savings likely won't be worth the risk of rising mortgage payments in the future, making an ARM a questionable decision. As with all aspects of being an agent, answering questions about adjustable-rate mortgages depends foremost on your ability to understand and respond to your clients' goals and objectives. To view the original article, visit the Homesnap blog.
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Interest Rates Just Went Up. What Does That Mean for the Housing Market?
After months of anticipation, the Federal Reserve this month raised interest rates. The move was not a surprise -- persistently high inflation and a strong labor market have monetary policymakers anticipating six rate increases over the course of 2022. Amid a strange, hard-to-predict economy, rising interest rates add yet another unique variable. And compared to other industries, real estate stands to be strongly affected by rising interest rates. Put simply, rising interest rates make it more expensive to buy a home. Rising interest rates mean rising mortgage rates, and rising mortgage rates mean that buyers have to shell out more to pay off their mortgage every month. How will rising interest rates affect the housing market? What outcomes should agents anticipate when advising leads and clients about rising rates in 2022? 1. Home Prices Could Fall – Or Not It's been the biggest point of discussion in the housing market for nearly two years, and rising interest rates will only fan the conversational flames: Are home prices going to stop rising? Traditionally, rising interest and mortgage rates tamped down home prices, as competition for homes decreased because of higher borrowing costs. Some experts think that will be the case in 2022, but others aren't sold. Just consider: Inflation is still at its highest point in decades Home inventory is still at an unprecedented low If general consumer prices continue to rise, home prices are unlikely to fall. And without many homes on the market, people may be willing to buy a home at its listing price, even as mortgage rates increase. 2. Millennial Home Buyers Are the X Factor Research indicates that a median first-time home buyer is in his or her early thirties. Millennials, who make up a plurality of the American population, are the generation that currently occupies this cohort. As interest rates rise, the home buying behavior of millennials will indicate the broader health of the housing market. On one hand, many millennials may not be able to enter the housing market as interest rates rise. Millennials already hold less wealth relative to other generations, since they came of age during the Great Recession and are disproportionately burdened by student debt. On the other hand, one result of the 2008 housing crash was the underbuilding of new homes. So, the number of millennials who make a good salary and are at the age to buy a home may not meet the supply of available properties. Despite higher interest rates, these millennials may power a housing market that remains robust, at least until the supply of homes meets or exceeds their demand. 3. Rising Interest Rates Could Cause Some Buyers to Enter the Market Rising interest rates mean rising mortgage rates. Is it possible that rising mortgage rates are, for now, actually heating up the real estate market? The answer is maybe. Remember that last week's interest rate hike was the first of six scheduled for this year. Mortgage rates are currently rising but still may be at their lowest point for the foreseeable future. Home buyers are not unreasonable to think that buying conditions are better now than they will be in a year. If some home buyers determine that rising interest rates will make the market even more challenging in the future, they may act to buy now. Buyers deciding to enter the market while they still can may maintain or even raise the price of homes and the negotiating leverage of home sellers. To view the original article, visit the Homesnap blog.
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Are Rising Mortgage Rates Actually Making the Real Estate Market Even Hotter?
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Talk Is Cheap, but Mortgage Rates Aren't: Scripts for Talking Sellers Off the Fence
If we have anything close to a sure-thing prediction for 2022, it's this: mortgage rates are going to rise. In fact, the Federal Reserve announced this themselves, warning potential home buyers that they're likely to raise interest rates three times in 2022. Experts are expecting interest rates to be over 4% by the end of the year. There's a silver lining to all this, however. Savvy real estate agents can use this information to nudge hesitant sellers off the fence. After all, the longer homeowners wait to sell their old house and buy a new one, the more expensive their future mortgage will be. In the video above, real estate coaches Tom Ferry and Jeff Mays discuss how agents can use rising mortgage rates as a talking point to convince hesitant owners to list their home. You'll learn: The best dialogue to get potential sellers to take action The first question to ask homeowners How to use the net sheet to your advantage A great line to demonstrate market conditions to current homeowners And more!
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[Best of 2021] 4 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures
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Friday Freebie: Mortgage Calculator and Amortization Schedule Tool
"How much?" is a question you'll hear a lot when helping a client buy a home. How much is the asking price? How much should we offer? How much can I afford? While we can't help you with the first two questions here today, we can help you help your clients understand how much they'll be paying every month. In this week's Friday Freebie, get two tools to help your clients compare the mortgage costs of up to five homes that they're interested in purchasing. Free Mortgage Payment Calculator + Amortization Schedule Tool, courtesy of Zurple The listing price of a home is one thing, but the monthly costs of a mortgage plus property tax, insurance, and HOA fees are quite another. Whether you need to help buyers understand which properties fit into their monthly budget or you want to lure prospects, these free tools from Zurple can help you out. The mortgage payment calculator and amortization tool is a downloadable spreadsheet that lets you: Compare up to five properties side by side See the estimated monthly cost of each property Review a variety of different loan options See a full amortization schedule Calculate the owner equity based on a specific year Leverage this tool by sharing it with clients or using it to walk them through their options before placing an offer on a home. The spreadsheet can also be uploaded to your website or a place like Google Drive to attract leads. Download your FREE copy of the Mortgage Payment Calculator + Amortization Schedule Tool now!
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4 Reasons Why the End of Forbearance Will Not Lead to a Wave of Foreclosures
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What You Should Know About VA Loans
There are close to 18 million veterans living in the United States today. These brave men and women, having served their country honorably, have earned VA (Veterans Affairs) benefits for education, life and medical insurance, and VA-backed home loans. As a real estate agent, you can help educate veterans about their home buying options to start, or continue, building their real estate portfolios. If you haven't worked with veterans and VA loans in the past, here are some things you should know.
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The Importance of Down Payment Assistance Programs in a Pandemic
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What Real Estate Agents Should Know About HUD Assistance Program
With the majority of the country still under quarantine, many Americans are facing a financial crisis. Stimulus checks have helped, but for many it won't be enough to keep up with expenses. With citizens out of work and waiting for their jobs to come back, many homeowners are concerned about whether they will be able to pay their mortgage in the coming months. You can make a positive difference in the lives of your clients by making sure they're aware of the Federal Housing Administration's Disaster Relief program. Under this initiative, the Department of Housing and Urban Development has financial assistance programs to help those in need. Here is a basic breakdown of the options and services available.
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Experienced one too many failed real estate transactions this year? Here is how to dramatically improve your success rate.
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Case Study: How Quicken Loans Boosted this Agent's Closing and Retention Rates
If there's one thing Quicken Loans has, it's name recognition. You've probably seen their ads on TV or online, but have you ever wondered what the company can do for your business? We talked to Ari Prostak, a top-producing buyer's agent with the Jason Mitchell Group to find out just that. Rather than getting overwhelmed by the sheer size of America's largest mortgage lender, Ari found that Quicken offers both agents and consumers an easy, tech-driven experience that's user friendly and customer-centric. In this new, downloadable case study, Ari shares: How Quicken's Verified Approval program provides peace of mind, ensures more closings, and works as a strong negotiating tool. How Quicken's customer service team works faster than smaller lenders, leading to happier clients and quicker closings. Why Quicken's trusted name and brand recognition is a plus for consumers. Why, despite relationships with multiple lenders, his multi-state team does the majority of their business with Quicken Loans. How working with Quicken Loans results in more referrals and repeat business. Download this free case study now to find out how Quicken Loans can boost your closing and retention rates!
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Agent Builds Veteran Homebuyer Resources He Wishes He Had
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Helping Your Clients Cope with Rising Interest Rates
For the past few years, low interest rates have been a major plus for those looking to purchase real estate. Unfortunately, those interest rates have been and continue to be on the rise. This time last year, interest rates for a 30-year mortgage were around 3.8 percent. Today they're averaging around 4.6 percent. Before long, buyers may start waiting for interest rates to go down before making a move.
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How Can You Use Restricted Stock to Buy a Home?
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Do you have sellers who are stuck? Here's how to set them free.
Fear of the unknown can be paralyzing. Especially for home sellers who are uncertain if they will be able to qualify for a mortgage and be able to buy again after selling their home. If your clients don't know, they just stay put. The Great Recession threw millions of homeowners underwater, meaning their homes were worth less than the mortgage debt tied to them. The number of seriously underwater1 homeowners has dropped nearly 50 percent in just four years, according to ATTOM Data Solutions. Many major metropolitan markets are seeing home prices above their pre-Great Recession highs, and at Opes Advisors, we have access to more lending programs than ever. Since becoming a division of Flagstar Bank, Opes Advisors has become even stronger. The Great Differentiator One of the most significant benefits that Opes Advisors offers real estate agents is something no other lender can offer: our proprietary technology called Opes Advantage™. If an agent has a seller who is "stuck," this is one of the best tools that can help set their client free. Opes Advantage is the first real estate decision technology that fuses mortgage lending services with financial planning. It provides both sellers and buyers with a personal financial model that helps them look at how buying or selling a home fits into their entire financial lifestyle and lifecycle. Only Opes Advisors provides this service, which can be accomplished between 45 to 90 minutes depending on the amount of scenarios and questions your clients have. Our real estate decision analysts can put your client's entire financial life into a model to see the impact of major life decisions before they are made, like buying or selling a home. When sellers go through this process, they gain clarity about their financial future: their "what ifs?" are answered, and they often come out of the process ready to sell, as they now have the information they need. It's not enough to just show your clients a mortgage calculator these days. For example, when they hear that interest rates are going up, they may automatically take themselves out of consideration. They may not realize that a 0.25 percent increase of a loan interest rate is only going to raise their monthly payment typically less than $30 for every $100,000 of the loan amount for a 30-year fixed-rate mortgage. When your clients can see these numbers in the context of their entire financial picture – not just a number on a mortgage calculator – it puts an interest rate increase in the right perspective. More loan options Once sellers have financial clarity, they also often need a financial strategy to figure out how to move from their current home to their next. Opes Advisors offers one of the broadest range of specialized products as a mortgage banker and direct lender. We can also broker loans which offer even more options to help sellers make their next move. From bridge loans and home equity solutions to creative approaches, Opes Advisors can help clients turn analysis into action with a conviction to act and have peace of mind about their real estate decisions. Sellers become buyers Most lenders don't spend a lot of time focusing their energy on serving sellers. They focus on serving buyers instead. There are two ways real estate agents benefit from the extra service that Opes Advisors provides focusing on sellers and helping them get "unstuck." First, using Opes Advantage, we help drive new business to real estate agents by providing transparent information that sellers need. Second, the vast majority of sellers become buyers immediately, and that means more business for real estate agents. That's what teamwork is about and why so many real estate agents are rethinking their relationships with plain vanilla lenders. They are looking for a local lender who can do more and offer more, and that's why Opes Advisors is becoming their first choice. 1 A loan is considered to be underwater when the total loan amount secured by the property is at least 25 percent higher than the property's estimated market value. Sheila McGinn is a Real Estate Decision Analyst for Opes Advisors, A Division of Flagstar Bank.      
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Getting to Yes: Why More Agents Are Turning to Opes Advisors
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Not All Loans Are Condo Loans
Becoming a condo owner can offer many benefits, from enjoying common amenities to being part of a community with no yard to mow or weeds to pull, and security often is provided. A condominium lifestyle can be great, especially for those looking to simplify their housing. However, financing a condo can be a little more complex, because not all loans are available for all condo complexes. That's because condos as a property type are different. There are different loan and qualifying rules to take into consideration, and characteristics that are unique to condos. Fannie Mae and Freddie Mac provide lenders with specific condo lending guidelines that include what they require from the homeowners association, insurance coverage, the percentage of units that may be rentals, the amount of the complex that may be retail space, and other restrictions. That's why financing a condominium can be more complicated than buying a single-family home. It's also why real estate agents need to work with a mortgage advisor who understands the local condo market, the complexities of condo lending, and how to avoid the gotchas. The key is this: there are many factors that can impact the ability to finance a condo that need to be considered before making an offer. Getting Financed One thing that real estate agents sometimes forget is that they may have the world's most qualified buyer, but that buyer may not be able to get a condo loan on the unit they want to buy. How can that be? Because the lender doesn't just look at the financial health of the buyer, they also look at the financial health of the property. The good news is an experienced mortgage advisor who knows the local condo market knows which condo complexes are more likely to be harder to get financing, which currently won't qualify for any conventional financing, and which are likely to be as easy to finance as any mortgage on a single-family detached home. Limited Review or Full Review When a mortgage advisor runs a borrower approval on a loan application for a condo, in the notes for the findings, it will specify if the condo complex requires a limited review, which means far less documentation, or a full review, which requires a lot more documentation. With a limited review, the only paperwork that's required is a condo questionnaire, the CC&Rs (conditions, covenants and restrictions), the homeowners' association (HOA) bylaws, the HOA budget that shows the reserves, and a copy of the current Certificate of Insurance. Then as long as the condo meets the basic Fannie Mae guidelines – that owner-occupancy is at least at 50 percent in the complex, that the total commercial or retail space is less than 25 percent, that no single entity owns more than 10 percent of the units, and that they are budgeting for at least 10 percent for reserves – this will all be a straightforward review process for the underwriter, who will sign off on the questionnaire and the condo itself. A full review can take much longer, but in both cases, Fannie and Freddie are simply trying to protect both the borrower and the investor (the entity that purchases the loan) to make sure the condo complex is stable and endures. Teamwork It's important to make sure clients avoid falling in love with a new condo before they discover they can't finance it. Give them the advice to talk to their lender first – before they begin their condo search. Encourage them to seek out someone like Opes Advisors who has experienced mortgage advisors, who know condo lending and know their local condo markets. Good mortgage advisors want to help you ensure that your clients don't waste time shopping for properties that they won't be able to buy. About the Author Scott Chase is Regional Director for Opes Advisors, A Division of Flagstar Bank. With over 15 years in the financial services industry, he is responsible for the acquisition, retention, and expansion of sales for the Bay Area, Central Valley and Southern California. Additionally Scott leads, coaches, and supports sales activities to promote sales. For more information he can be reached at 650.543.8008 or [email protected]        
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Busting Millennial Home Buying Myths
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5 Things You Should Know About VA Loans
Holidays like Veteran's Day and Memorial Day bring the dedicated service men and women protecting our country front and center in our minds. Their bravery and sacrifice grant us the security and freedom we enjoy daily, and with November 11, Veteran's day, fast approaching, now is a great time to refresh your knowledge of VA loans and possibly even expand into a new niche market. Here are five things you may not know about VA loans.
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More than a 'Doctor Loan,' Opes Advisors Intros New Home Financing for Professionals
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If Interest Rates Rise, How Can It Be the Best Time to Buy?
The Federal Reserve has increased interest rates twice so far this year and, according to a survey by the Wall Street Journal, will possibly do so one more time this year. With conventional wisdom believing that interest rates could head higher, how can it be the best time to buy a home? Impact on mortgage rates The first thing to look at is what has happened to mortgage interest rates since the last time the Fed increased the Federal Fund Rate in March, from 0.75 to 1.00 percent. Mortgage interest rates have actually dropped, according to the Freddie Mac Primary Mortgage Market Survey. The Fed interest rate hike was announced on March 15. On March 16, Freddie Mac announced the 30-Year Fixed Rate Mortgage was 4.30 percent and the 15-Year Fixed Rate Mortgage was 3.50 percent. On March 23, the rate dropped to 4.23 percent for the 30-Year and 3.44 percent for the 15-Year. The next week, on April 6, the rates dropped again to 4.10 percent and 3.36 percent for the 30- and 15-year mortgages respectively, and they have continued on this trend. The Federal Reserve does not control mortgage rates. They control the Federal Funds Rate and that is the interest rate that banks pay to lend money to each other, not to you and me. There is no direct cause and effect to what the Fed does with 30- and 15-year fixed mortgage rates, except to their tapering of their balance sheet repurchases. And on this front, we do not believe they will do anything to disrupt the housing market. Rates have gone relatively "sideways" since January, and that makes the affordability of rates even more important to consider. What historically low means: better affordability When you hear the phrase "mortgage interest rates remain historically low," the problem is that 30-year fixed rate mortgage interest rates have been below 5 percent for so long, we forget that people were buying homes with 13 percent interest rates in the 1980s; 10 percent interest rates in the 1990s and 8 percent interest rates in the 2000s. When we compare interest rates today with interest rates and mortgage payments historically, we forget to consider the impact of inflation. As we have shared before, when you look at mortgage payments today, and you make the adjustments for inflation, we are paying 20 percent less than we did for a mortgage in 1989. Compared to when housing prices peaked in the summer of 2007, we are paying 35 percent less in mortgage payments today than we did then. Trying to catch a falling knife There's a phrase in the financial services business that describe the behavior of customers who try to wait for interest rates to drop to their lowest levels to lock in the lowest rate possible: "It's like trying to catch a falling knife: it's nearly impossible to do without getting hurt." More importantly, it really is unnecessary when you consider what happens when mortgage rates rise – they can jump, and jump quickly. The fact is that no one can predict when mortgage rates rise and the best advice to any customer is if you like the interest rate, lock it in and know you will have obtained one of the lowest historical rates in the history of the world. Interest rates move up and down within a range, or are "range-bound," and most economists predict, barring an unplanned economic disaster, that interest rates are likely to stay within a range that fall below the 5 percent threshold, but if you are waiting to buy, both real estate agents and mortgage advisors will tell you from experience: don't wait if you can afford the purchase and it serves your family's concerns. When mortgage rates do rise, they do tend to jump up to a new range, as they did after the election in November. When you think about the impact higher mortgage rates can have on your purchasing decision, it can be a bigger motivator to act now versus waiting. Buying a $500,000 home with a 20 percent down payment and with a mortgage at 6 percent versus a mortgage at 4 percent means paying 61 percent more in total interest payments. So when you see interest rates still remaining under 5 percent today, even with interest rates rising, relative to historical rates, buying now is clearly the best time to buy. Susan McHan, as President of Distributed Retail Mortgage Division at Opes Advisors, a Division of Flagstar Bank, is bringing to fruition her lifelong journey of helping people make the most effective financial decisions to support their current lifestyle and prepare for a satisfying future.        
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What NOT to Do When Buying a Home
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Don't let your customers hit the ‘pause’ button because of a rise in mortgage rates
When mortgage rates rise, the instant reaction among real estate professionals can often be a concern that the housing market is going to take a pause. Yet, the true impact of the most recent increase in mortgage rates won't prevent the vast majority of today's home buyers from qualifying for a mortgage. Real estate agents and mortgage advisors can help buyers avoid hitting the pause button by educating their clients on what an increase in mortgage rates really means. Let's put today's mortgage rates into perspective with four important facts. First, mortgage rates are lower today than they ever were from 1971, when Freddie Mac first started reporting on mortgage rates, until 2011 (see chart). In fact, when you look at mortgage payments, we pay 20 percent less than we did in 1989 for a mortgage, adjusted for inflation. And compared with the peak in housing prices in July 2007, we are paying 35 percent less in mortgage payments today than we did then. It's important to remember that we are still paying less for our mortgages today. Second, a half point increase in a mortgage interest rate is less than $30 a month more for every $100,000 borrowed. Third, history tells us that mortgage interest rates are really never static. In fact, mortgage interest rates over the last 28 years have remained "range-bound." When interest rates move higher or lower, they tend to move up and down within a range. Interest rates don't just increase and stay there – and that's another reason why it's really impossible to "catch" the lowest interest rate. Fourth, over the last 200 years, U.S. interest rates have a historical average of 5.18 percent. Calming the emotional reaction It's human nature to fear the unknown. Not knowing the whole story is one of the reasons why some home buyers take a pause when they hear mortgage rates are going up. Without an understanding of what an increase in mortgage rates really means to them, they are more likely to make an assumption that simply isn't relevant to their particular situation. Home buyers may hear only one side of the story on the news – that mortgage rates have increased – and what they will see is a worse-case scenario: a very small number of first-time home buyers who were barely able to qualify before now can't because of a rise in rates. However for the vast majority of people shopping for a home, rates are so low and so attractive that even with the increase, mortgage rates remain in the lowest range they have ever been. Information produces confidence We will continually do our best at educating home buyers, potential home buyers and sellers about the real impact of a rise in mortgage rates and that mortgage rates are range-bound, and still remain within the lowest range ever. In your marketplace, you can use your highly valued expertise to help shape the views of your clients by educating them about mortgage rates, so they can move forward confidently. One of the ways to help your buyers avoid hitting the pause button. Susan McHan is one of the most influential executives in the mortgage industry as co-founder, CEO, and President of Mortgage Banking at Opes Advisors, a Top 25 mortgage banking and investment management firm, known for its invention of the industry's first real estate decision technology Opes Advantage.
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CFPB Fines Real Estate Company: Do Agents Need to Worry?
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A new way to look at the mortgage preapproval process
On any given day, people make important decisions that impact their personal financial lives, whether it's large purchases, stock investments, managing debt, or saving for long term goals like retirement. However, one of the most important financial decisions with the farthest-reaching consequences for a family's financial future is buying a home and determining the amount of home purchasing power they have and the mortgage to support this decision. The irony is while people often will spend a dozen hours or more researching a stock investment of a few thousand dollars, or maybe looking at mortgage rates online, but not the amount of purchase power they have and what that means to their financial situation. And this is often the biggest financial commitment people make. The problem today is that many consumers think of a mortgage as simply a financial tool that helps them finance their homes and not as a key component of their financial future. Compounding this problem is that much of the financial services industry approaches mortgages the same way. But at Opes Advisors we see things differently. Entering the mortgage process is part of one's real estate decision, which it is a very complex financial puzzle that is different for every person, based not just on their current needs, but their lifetime goals and plans. That's why at Opes Advisors, we see real estate decision-making as a key component of each family's financial future. Asking the right questions Today's housing market is complex and changing rapidly, both buyers and sellers know it. Currently, more than 70 percent of adults believe that now is a good time to buy a home and 43 percent believe that strongly, according to the National Association of REALTORS®. With rising rents, rising rates, appreciating home prices yet still historically low mortgage rates, homeownership continues to be attractive for the long term. Importantly, first-time buyers accounted for 34 percent of all home sales in June, up more than 30 percent since May and the highest in over four years, the NAR says. But is this trend reversing, are people more afraid today than even three months ago? Unfortunately, home buyers may be asking the wrong questions. Before determining if you can afford a home, each buyer should ask, "In light of my personal financial situation and my long-term financial goals, is now the best time for me? If so, what works best for me today and tomorrow?" Again, the decision to buy a home and finance a mortgage is not a one-size-fits-all answer. Leveraging Mortgage + Tech + Advice We choose to look at the mortgage as part of the real estate decision process, because it is a vital piece of one's overall financial strategy. That's why we created Opes Advantage, a revolutionary technology invented in Silicon Valley. It is the first real estate decision technology to fuse mortgage lending services with financial advice. Opes Advantage provides clients with a personal financial analysis that empowers more effective life decisions, such as buying a home, which is one of the most important financial decisions people make. Powered by Opes Advantage, our new mobile app (called OpesView™) helps home shoppers see the future financial impact of buying a house at different price points before they make an offer. How much the bank approved is important, yet more important is how a home loan can affect one's lifestyle. In a matter of 45 minutes, working with one of our Series 65-Registered Advisors, home buyers get to see the future of owning their new home inside their long term financial concerns. Working with Opes Advisors, people get to imagine different possibilities of things that might happen in their future and how they will impact their finances – 5, 10, 20 years down the road. This unique process, only available from Opes Advisors, helps people discover what matters for their financial lives, for all times in life, and allows them to move forward confidently. Why does a new approach to mortgage matter to real estate agents? Many home buyers struggle unknowingly with financial uncertainty, and it's not limited to first time home buyers. Real estate agents often recognize the signs of this condition – looking within a wide range of home prices, unsure of how much they can bid on a new home and difficulty in making a real estate decision. Just because the bank qualified them for a loan, doesn't mean buyers are comfortable with the amount or understand how the financing affects their lifestyle. By contrast, home buyers who get to see the long-term impact of their home purchase – and its financing – on their own financial future are settled in their real estate decision and better prepared to act. For real estate agents, a confident home buyer also has peace of mind after the closing, and is more likely to use their services again or make referrals.
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Mortgage + Tech + Advice: A better path for homeowners
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Summer School: 3 Online Training Opportunities for Real Estate Agents
The kids may be out of school, but class is still in session for agents who want to gain new skills this summer. Just this week, we learned of three new educational opportunities in areas like listing photography and social media. All options are offered online, too, which means that you can work through them at your own pace while powering through the busy season. Here's a quick rundown of each: #GetSocialSmart Academy For years, Katie Lance has been real estate's go-to guru on all things social media. It's likely you've heard her share her knowledge on stage at real estate conferences, or read her name in any number of industry publications. On Tuesday, Lance launched her latest knowledge sharing venture, the #GetSocialSmart Academy. It's a web-based "learning portal" featuring social media training videos, downloadable materials, and live webinars. The content is based on Lance's 6-week coaching program, and covers topics like content strategy, blogging, Facebook advertising, Instagram, Pinterest, video marketing, livestreaming, LinkedIn, Twitter, and beyond. Until June 30, Academy membership is available at a deeply discounted "early bird" rate. Check out GetSocialSmart.com to learn more. Looking for similar training opportunities? Check out The Paperless Agent and/or their Real Estate Digital Marketer (REDM) certification course.
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[Infographic] 5 Down Payment Myths Debunked
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Boost Customer Service by Being an Expert on the Mortgage Process
Ah, real estate school: That time you spent reading or listening to what seemed like endless hours of lectures. And what did you learn about actually listing and selling real estate? Not much. Sure, you walked away from the experience knowing – without a doubt – that there are 43,560 square feet in an acre. But how to work with first-time buyers or how to determine the market value of a home? These things aren't covered in licensing classes. New agents are then cut loose to work with consumers with whatever real estate training their brokers provide. It's a safe bet that not much, if any, of that training has to do with the mortgage process. To many agents, the mortgage process remains completely foreign and they depend on the lender to explain the process to their clients. But agents who do their homework and learn the ins and outs of the mortgage process will not only be able to share valuable information with clients, they will also provide a service that will win referrals and take their business to the next level. Add Value for Your Clients Value is a popular buzzword in the real estate industry lately – how to bring value to the process and how to prove your value is top-of-mind with many agents. It's all about maximizing the value-added services that you bring to the table that few other agents can. Let's face it, it's not always easy to find ways to differentiate yourself from other agents. One of the best ways is by providing stellar customer service. What you think defines "customer service," however, and the definition your client gives may be two different things.
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Why You Should Call Your Credit-Challenged Prospects Now
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Down Payment Information is a Marketing Opportunity
We've all heard it before--content is king when it comes to building a successful online presence. It's not just any content, though. The information you share has to rise above the typical noise on social media, websites, and other channels. What you share, above all, must be useful. What's "useful" to today's homebuyer? Let's turn to recent statistics to find out. According to NAR's 2013 Profile of Home Buyers and Sellers, 12 percent of all buyers overall cite that saving for a down payment is difficult. This difficulty is far greater for first-time buyers who lack existing equity to roll into a down payment. Would-be buyers who are unaware that programs exist to help them with their down payment may well sideline their dreams of owning a home. By sharing vital information on down payment assistance programs, agents can convert those sidelined prospects into home owners. Down Payment Resource (DPR) is a powerful tool agents can use to do just that. DPR integrates with your MLS to provide information about down payment assistance programs in your area. It takes active residential listings and processes them against a database of all the programs that exist in a market. It then matches the properties that are eligible, based on location and list price, to all of the programs for which it would qualify. Down Payment Resource isn't just an aggregator of information--it can also act as a valuable marketing partner. Two-thirds of agents say that with DPR they are able to convert sidelined prospects into qualified homebuyers. The following easy-to-use tools can help agents capture more of these consumers and increase their chances of homeownership.
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Is Your Website Serving the Needs of Tomorrow’s First-Time Buyer?
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3 Final Down Payment Assistance Myths Debunked
This is the final installment in a series of articles that debunks common down payment assistance myths. Read the first and second articles here. Myths are hard to combat. They can be ingrained over a number of years and deeply held. Sometimes it's only out of necessity and changing times that the truth is embraced. Consider that the August REALTORS® Confidence Index Survey (released Sept. 23) weakened slightly due to concerns about the prospect of further increases in interest rates and the continued difficulties in accessing mortgage financing. We believe it's time to look at how down payment assistance can play a part in helping more buyers gain the mortgage financing they need. Drum roll please...we debunk our final three surprisingly common myths about down payment assistance. 8. Down payment assistance dollars are never forgiven In any given market, there are a variety of programs, including some that defer payments or interest and others that offer a grant or forgivable loan. First, it's important to understand how programs work. Nearly every down payment assistance program creates a lien on the financed property, just like the first mortgage. Homebuyer programs take a subordinate second or even third lien position. But not all programs – typically grants – have to be repaid, and those that do will back-load that obligation, waive interest, defer payments, and provide a unique upfront buying power and opportunity for homebuyers.
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4 Ways to Help Buyers Prepare for Higher Mortgage Rates
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Friday Freebie: Download a Free eBook from Down Payment Resource
Did you know that you can leverage down payment assistance programs to simultaneously help homebuyers and market your listings better? If you're not sure where to start, Down Payment Resource is offering a free eBook to educate real estate professionals about these programs. Free eBook on Down Payment Assistance Programs Research shows that saving for a down payment is the number one obstacle to homeownership. Many would-be homebuyers, however, are unaware of the millions of dollars available to them via assistance programs. Unfortunately, many agents aren't aware of these programs, either. If they were, they'd realize that down payment assistance is a powerful way to create new opportunities for homeownership--and potential new clients. Down Payment Resource has created a free eBook to help real estate professionals learn more about today's buyers, down payment assistance programs, and how access to information about these programs can help qualified homebuyers and the collective market. In this eBook, you will learn: How assistance programs can help you create new customers The three most common homebuyer assistance programs FHA loans and down payment assistance programs can work together Common down payment assistance myths How Individual Development Accounts (IDAs) can help sidelined homebuyers And more! Click here to download your free eBook!
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Product Review: Down Payment Resource
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Three More Down Payment Assistance Myths Debunked
Guest contributor Down Payment Resource says: Preconceived ideas often keep us from investigating further. In the case of down payment assistance, myths like "it's only for first-time homebuyers" and "it's difficult to qualify" prevent potential buyers from exploring all viable paths to homeownership. According to the 2013 National Housing Pulse Survey, more renters are now thinking about purchasing a home, up from 25 percent to 36 percent. Many of these renters have the income and credit qualifications to buy a home, but simply need to overcome the down payment hurdle. Too often, long held myths about homebuyer programs hold them back. We debunk three more surprisingly common myths about down payment assistance. Don't miss our first installment where we debunked Myths #1 - 4. Myth #5: Down payment assistance is only for inexpensive homes Many people focus on the word "assistance" in down payment assistance, believing it is only for narrowly defined homebuyers and "targeted" neighborhoods of very inexpensive homes. In fact, homes in any neighborhood may be eligible with sales price limits typically ranging from $200,000 to over $700,000 in high-cost markets. On average, 70% of all homes for sale are eligible for one or more programs. Some homebuyer programs can have income limits of up to 120% AMI and higher, which can amount to well over six-figure incomes in countless markets across the country. In addition, some may offer tiered assistance dollars at varying income levels so higher incomes might yield lower assistance amounts, but higher income isn't an automatic disqualifier. Income limits are almost always based on household size, so limits for a family of five are significantly higher than for a single person.
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Mortgage Calculators: Qualify Leads and Save Time
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4 Common Down Payment Assistance Program Myths Debunked
Today's homebuyers are doing significant online research before beginning their home buying search, yet there are still many misconceptions about home financing and down payment assistance programs. Home prices, along with down payments, are increasing, and assistance programs can help make buying a home as affordable as possible. Are these common myths keeping you from investigating homebuyer assistance options? Myth #1: Down payment assistance programs are only for first-time homebuyers. First-time homebuyers are defined as someone who has not owned a home in three years. And, not all programs specify that you must be a first-time homebuyer. It's important to know that assistance programs are for homebuyers, not investors. Most housing agencies will require that the home is occupied as a primary residence in order to qualify. In addition, homebuyers purchasing a home in a designated target area (typically for revitalization efforts) may receive special benefits such as higher assistance amounts, more lenient income requirements and the first-time homebuyer requirement may be waived. Veterans are often eligible for a first-time homebuyer waiver, too! Myth #2: Assistance programs are no longer funded. There are many public and private-funded programs available. In fact, there are hundreds of millions of dollars in down payment assistance, tax credits, affordable fixed-rate mortgages and rehab loans available throughout the country.
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How to Make Loan Pre-approvals Work in Your Favor
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How the FTC MAP Ruling Impacts You
Guest contributor RatePlug says: In August of 2011, the Federal Trade Commission passed new regulations, referred to as "MAP," that directly affect the real estate industry. What exactly does MAP stand for? More Annoying Paperwork? Sounds like a bowl of alphabet soup! Our government has a way of using acronyms for just about everything, which really gives the public no clue as to what really is being passed. The Mortgage Acts and Practices (MAP) regulations were enacted to regulate unfair or deceptive advertising of mortgage products by anyone involved in a real estate transaction. This includes builders, mortgage brokers, lenders, and real estate professionals like you! Ask yourself the following four questions to see how the MAP ruling impacts your day-to-day business practices: Do you provide your clients ANY mortgage related information (flyers, rate information, etc.) to assist them in the buying process? Does your marketing collateral or website have any misleading mortgage tools or statements? Do you provide a relationship disclosure on ALL mortgage related advertising? Do you maintain archived records for two years on all mortgage information provided to your clients? Are those records retrievable by date, agents involved, and property address?
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