If Mortgage Rates Are on the Rise, What Do You Tell Your Clients About Buying a Home?

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November 20, 2018 | By RGR Marketing Blog

How to Help Your Clients Overcome Mortgage Rate Complexities

Mortgage rates are rising. It’s a fact of life that both buyers and mortgage companies need to accept. While it is completely understandable why some buyers might have trepidations about buying a home at this time, the truth is: this is just how the market works. Rates rise, and rates drop.

As a mortgage company, it’s up to you and your agents to help calm the fears of prospective buyers as you help them do the best they can to lock in the lowest rate possible. Here are some tips to help you accomplish this, so you can maintain your growth during times of rising interest rates.

Give Your Clients the Truth About Rising Interest Rates

Yes, the interest rate is climbing. In fact, most experts are predicting that it will continue to climb for the remainder of the year. Experts agree that they believe the rate will hit 5% and then level off. While your clients may be fearful of that percentage, the reality is, it’s still a very low rate for a mortgage.

You should explain to them that from 1979 to 1990, interest rates were commonly above 10%. From 1992 to 1998, rates fell to a range between 6% and 8%. So, by these standards, today’s rate is still remarkably low.

Overcoming the Effects of Higher Interest Rates

Even though the rate is still historically low, its gradual rise will affect some buyers, especially in terms of how much home they can afford. This is one area where your expertise can benefit them. You can provide them with the information they need to know about how to afford the home they want and improve their odds of getting the mortgage they need.

The first thing you should advise your client about is that the more money they can put down on the home they want, the better off they will be. Paying at least 20% will help lower the monthly payment and allow the buyer to avoid having to pay for private mortgage insurance (PMI). They can also use cash at closing to help pay discount points, which typically equals 1% of their loan amount.

You should also advise them to try to get their credit score above 760. Buyers with scores higher than 760 are granted the lowest interest rate possible on their loans. But, even if their score isn’t that high, you should tell them for every 20 points their score increases, their interest rate will be slightly better, so cleaning up their credit and paying down as much debt as possible is crucial if interest rates are a concern.

Prospective Buyers Might Want to Buy Sooner Than Later

If your client is on the fence about buying, you should remind them that the sooner they buy, the lower rate they’ll get on their loan. The interest rate isn’t expected to change directions any time soon, so waiting to buy will only get them a higher interest rate down the line. If they are concerned about the interest rate, then they should start getting serious about buying sooner than later.

Consider an Adjustable Rate Mortgage

If your client is not looking to live in the home for a lengthy period, then you might want to go over the pros and cons of adjustable rate mortgages with them. This can benefit buyers who are either planning on moving again in the future, or coming into a large sum of cash in the future.

With an ARM, they can lock in a lower fixed interest rate for the first five, seven, or ten years, after which the rate will be adjusted to the national rate. The goal would be for your client to sell the home before their fixed interest period expires.

Rates are rising, but people still need to buy homes. Being able to help them overcome the fears of higher interest rates will help you close more sales and produce more satisfied customers.

If you’re a mortgage company interested in purchasing better mortgage leads, contact RGR Marketing today. We can provide you with verified leads that are validated and tailored to your specific demographics and requirements.

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How to Help Your Clients Overcome Mortgage Rate Complexities

Give Your Clients the Truth About Rising Interest Rates

Overcoming the Effects of Higher Interest Rates

Prospective Buyers Might Want to Buy Sooner Than Later

Consider an Adjustable Rate Mortgage

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money today!

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How to Help Your Clients Overcome Mortgage Rate Complexities

Give Your Clients the Truth About Rising Interest Rates

Overcoming the Effects of Higher Interest Rates

Prospective Buyers Might Want to Buy Sooner Than Later

Consider an Adjustable Rate Mortgage

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