The mortgage industry is forecasting close to $4 trillion in mortgage volume for 2020. The record numbers are attributed to a robust housing recovery and the fact that interest rates have stabilized from earlier volatility. Most analysts expect mortgage rates to increase next year with the new presidency, an increase in inflation, and a stabilizing economy. Everyone surveyed has forecasted a steep decline in total volume for 2021, with predictions for rising rates and a cooling housing market.
Predicting where the market might be headed is one identifier that separates a mortgage expert from the rest. Still, most mortgage shoppers think that “the lowest rate” is the most important thing to consider when selecting a lender or broker. Of course, that needs to be a key consideration, but I continue to try to educate everyone on another immeasurable variable - which is “value.”
When pursuing value, I am referring to finding someone who has the expertise and experience that go well beyond just quoting a mortgage rate. That individual needs to understand the dynamics of your particular situation and what your short-term and long-term objectives are. I have many very brief conversations with prospects who merely want to know my “bottom line rate” and have little to no interest in understanding how to discern the true distinction between mortgage rates when shopping around.
This week I was excited to relate the news to my clients - who were consolidating their two mortgages and paying off credit card debt - that their loan was “cleared to close.” They previously had an issue obtaining a proper appraisal value with another mortgage broker, which we thankfully attained without issue. Additionally, as a self-employed business owner, we overcame many challenges with their recent decline in revenue due to COVID. They were elated to hear that everything was signed off, and they were excited to be saving over $800 a month with this refinance.
They were eager to sign, but I requested a conference with them before giving the “ok” for closing. In finalizing their loan, I saw a further opportunity for them to save even more. When all the numbers were completed, I told them that by reducing the final loan amount by $4,000, they could obtain an even lower rate than I had promised them. It was a no brainer for them as they wouldn’t be making a December mortgage payment because of our refinance, and they would be getting back close to $5,000 from their current escrow account.
They couldn’t believe how I went above and beyond by looking for additional savings for them pre-closing despite their total satisfaction thus far. Guess what? I had several of those calls this week, and it gave me enormous pleasure to provide value well beyond the great rates and fees I promised all these applicants that earned their business in the first place. Another client who was also ready for closing called me to say there was a mistake, in her favor, with the final rate she received from us. The rate on her final closing estimate was.25% lower than what she locked in when we began. “Surprise! I wanted this to be your first gift for your new house,” I told them. These are, but a few examples of the benefits that my clients received that were not part of the initial screening process when they chose to work with me.
In this industry, “value” is not something you can quantify upfront but something that is gained in the end. Each mortgage application has something, somewhere, that is unique to the applicant that can be uncovered with the proper presence of mind. Having facilitated thousands of applications, I have experienced so much, and yet, the novelty of finding something of value never gets old. I consider it a challenge to find a way to “upgrade” a loan request – whether it be by helping improve a credit score, providing budgeting tips, or giving recommendations for cheaper insurance or tax savings tips. In the end, the dollars earned amount to well beyond the already aggressive rate and term we provided.
As I have said in the past – many mortgage companies are like a Drive-Thru takeout service. You place your order in one window, and you drive around to the other side, hoping to get your request promptly, without any mix-ups. What if, in addition to your exact order, you also get complimentary samples of other foods you might like, as well as extras, and a rebate on the price you agreed to pay. It’s truly invaluable. Shout out to Naomi Bodek and Happy Birthday to Lauren Greene, Jenny Rosenfeld, and Michelle Vernuccio.
Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]