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.

  1. 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.
    1. Look into mortgage loans via the Federal Housing Authority (FHA) that require only a 3.5% down payment.
    2. 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.
    3. 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.
  2. Look into grant programs to help buyers with down payments.
    1. 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.
    2. 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.
  3. Get preapproved for a mortgage PRIOR to shopping for a house.
    1. 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.
    2. A preapproval puts everyone on notice, everyone includes sellers and agents, that the prospective buyer is actually serious about buying a house.
  4. Seriously consider getting a 15-year mortgage rather than a 30-year mortgage, if possible. A 15-year mortgage will build wealth more quickly.
    1. 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.
    2. 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.
  5. Adjustable Rate Mortgages (ARMs) are risky.
    1. ARMS start out small but then fluctuate over time with the market and could cost more than a fixed-rate mortgage.
    2. 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.
  6. Another reason to Better Shop Around – see if avoiding Private Mortgage Insurance (PMI) is possible.
    1. PMIs protect lenders in the event the buyer/owner cannot pay the mortgage and the house has to be foreclosed upon.
    2. PMIs are often required for buyers who make smaller than 20% down payments.
    3. NACA does not require PMIs.
    4. Credit unions many not require PMIs.
    5. 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