Want to help your clients and prospects save money on a mortgage? Offer these tips in your own voice to your mortgage-seeking clients/prospects in whatever way(s) you choose. Your clients/prospects will in turn thank you over and over again by offering you their business.
Ways to offer these tips…build a free workshop around them; post them on your website; hand them out in flier-form at networking events; create an e-book around them, create a series of blog posts featuring one tip per post. Likely you’ll come up with other ways to make these money-saving tips on mortgages make money for you.
- Do as Smokey Robinson and the Miracles sang, “Better Shop Around.” Rather than just wandering into a bank “looking” for a mortgage, shop for a mortgage at all types of lenders. This is particularly important for first-time buyers.
- Look into mortgage loans via the Federal Housing Authority (FHA) that require only a 3.5% down payment.
- The Department of Veteran Affairs (VA) has a perk to putting down as little as 5% that then shrinks the VA funding fee (for fist time buyers) to typically 2.15% with no money down.
- Look into the Neighborhood Assistance Corporation of America (NACA). This national non-profit offers homebuyer classes and savings programs that help buyers qualify for low down payment loans and no closing costs.
- Look into grant programs to help buyers with down payments.
- The Down Payment Assistance Program is a national government program administered by each state so check with your state’s Housing Financial Agency. The amount of assistance varies by state.
- Some states offer homebuyers stipends to move to that state. For example, Vermont offers $10,000 to out-of-state buyers to settle in Vermont. Begin your research by checking with each state’s Housing Authority.
- Get preapproved for a mortgage PRIOR to shopping for a house.
- A mortgage preapproval tells the prospective buyer how much a lender would be willing to lend. How much a lender would be willing to lend defines how much house the prospective buyer can afford to buy.
- A preapproval puts everyone on notice, everyone includes sellers and agents, that the prospective buyer is actually serious about buying a house.
- Seriously consider getting a 15-year mortgage rather than a 30-year mortgage, if possible. A 15-year mortgage will build wealth more quickly.
- Compare: over 10 years with a 15-year mortgage, the buyer would have $121,000 worth of ownership equity built up; over 10 years with a 30-year mortgage, the buyer would have $42,000 worth of ownership built up. $121,000 compared to $42,000? It’s a no-brainer.
- Compare: over 10 years with a 15-year mortgage, the buyer would have paid $50,000 in interest; over 10 years with a 30-year mortgage, the buyer would have paid $74,000 in interest. Again, it’s a no-brainer.
- Adjustable Rate Mortgages (ARMs) are risky.
- ARMS start out small but then fluctuate over time with the market and could cost more than a fixed-rate mortgage.
- On the other hand, ARMs make real sense for buyers who intend to live in the house for just a few years, 3-4 years, and then sell.
- Another reason to Better Shop Around – see if avoiding Private Mortgage Insurance (PMI) is possible.
- PMIs protect lenders in the event the buyer/owner cannot pay the mortgage and the house has to be foreclosed upon.
- PMIs are often required for buyers who make smaller than 20% down payments.
- NACA does not require PMIs.
- Credit unions many not require PMIs.
- Also look into wealth-builder loans. These loans require no PMIs and they build home equity quickly.
Thanks to NPR’s Chris Arnold and Cholee Weiner for source data.
Also read: https://timandjulieharris.com/2019/09/24/whats-hot-and-whats-not-in-septembers-housing-trends.html, https://timandjulieharris.com/2019/08/27/2019-drop-in-foreign-sales-temporary-or-prognostic.html, https://timandjulieharris.com/2019/09/04/harris-rules-daily-success-game.html
