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Qualifying Potential Buyers - What you need to know

Turning a potential buyer into your client can be challenging for many real estate agents. If a potential buyer calls you on the phone or walks through your door, do you have a system in place to qualify the buyer before you show them homes for sale? MBA Mortgage can do all legwork for you so you can focus on doing what you do best, working with pre-approved buyers and selling homes.To effectively convert potential buyers into clients, put yourself in your prospect’s mind. When they call you up or walk through your door, they have a number of questions on their mind: What should I expect from the agent? What homes will he show me? What forms will I be expected to fill out? What types of questions will I be asked?  Addressing these questions is only a first step.  Before you take buyers out to search for homes, find out if they are both ready to buy and have the means to do so. Ask them questions about:

  • Their ideal home – What price range are they looking at?
  • Working with a Loan Officer – Are they currently working with a licensed Loan Officer?  Do they have any questions about the lending process?
  • Their financial situation – Do they need to sell their home before buying a new one?
  • Making a purchasing decision – Have they ever purchased a home before – and if so, how long ago was that?  Who is going to be on the mortgage?
  • Their readiness to buy – Are they prepared to move forward if they find a home that meets their criteria?

MBA Mortgage Corporation has over 30 years of combined experience working with home buyers.  We bring our extensive background and knowledge of the mortgage industry to provide dedicated, unmatched service and professionalism to your clients.  By confirming all information needed to receive a mortgage before pre-approving we insure a high conversion of your potential buyers into closed home purchases.  MBA Mortgage specializes in all aspects of the mortgage industry, including residential, commercial, and construction financing.  With over 40 lenders and countless programs, MBA can find almost anyone financing for their mortgage needs.  We attribute our success to our dedicated team of mortgage professionals whose enthusiasm and commitment to customers have established us as leaders in our field and a trusted partner.  We insure you are working with qualified buyers and focus your time and energy into servicing their home buying needs.

What happens if a buyer isn't yet qualified? MBA Mortgage will work with your client with a step by step action plan to get - pre-approved. We will check in on them over the length of the plan to answer any questions and confirm that your clients stay on track. This way your client stays your client and gets the value added services offered by MBA Mortgage on your behalf .

Let MBA Mortgage Corporation take the guesswork out of you clients relationship.  Working with us gives you and your client the peace of mind knowing what to expect regarding max loan sizes, timelines, and other major expectations.  Let us help you focus on what you do best, by letting us do what we do best for you.  
  

Top Ten Reasons for realtors to work with MBA mortgage 

1.       Service- So much could be said here, but let’s start with local ownership and pride. We don’t have commercials, billboards, or radio advertising. All we have is past clients, so we make sure our service levels are the best. (any customer testimonials would be great to go with this)

2.       Accessibility- Our loan officers give their cell phone and email to every borrower. We make it a habit to work with referral partners and borrowers when it is convenient to them. Call on Saturday, no problem. Questions or concerns at 10pm are welcomed. We have title attorney’s that will close anywhere anytime.

3.       Online Leads- Online lead generation is a gold mine for you. All our loan officers receive 5-10 qualified purchase leads a day. Most of the time these borrowers do not have representation. Imagine working with a Broker that can give you interested purchasers every week!!

4.       Pricing- Because we are a broker we have over 20 banks bringing the most competitive pricing in the market for our borrowers.

 5.       Underwriting- We have a significant amount of experience with each of our lenders, and are updated day to day on their underwriting turn times. If we need a rush we know the best lender to go to. Deadlines are not an issue for us.

6.       Options- as a Broker we offer every option available in the market today to our borrowers. All FHA products, 100% USDA, 100% VA, 10 Financed properties, My Community Mortgage, HELOC, lender paid mortgage insurance, multi-units, mixed use, commercial and so much more. You name it and we can finance it. One source for every product. Just ask! 

7.       Efficient- Between our technology and knowledge; we offer speed not seen since the “stated/stated” days. We utilize property inspection waivers, doc waivers, same day underwrite, same day closing docs and so much more.

8.       Unconventional- Most bankers want the best qualified borrowers. Not us. We have competitive rates for the best qualified, but we are exceptional when it comes to less than perfect borrowers. We offer in-house credit counseling tools to rapidly change credit scores, and programs to establish credit. Purchase and refinance down to 540 credit scores and Chapter 13 BK buyouts.

9.       Builders? - Have a builder who can’t find buyers with 20% down? Our FHA new construction product offers 96.5% loan to value with credit docs good for 120 days. This means we can underwrite a borrower and the approval is good for the entire construction period. No more wondering if the borrower will be qualifies when the home is complete.

10.   Distressed- Ok, one more…distressed properties. We offer full 203k, 203k streamlines, Fannie Mae Home-style Renovation, Fannie Mae Home Path, USDA with escrow hold back, and so much more for your bank owned buyers/sellers. 

The battle over the purchase price!

Is it worth it? 

Have you ever been in a negotiation where you and the seller just could not agree on the final price?  They want more, you just want a little less and it goes on for a week or two, until finally someone gives.  It can be a very anxious time in your life.  Of course everyone wants to save whenever they can, so that $5,000 or $10,000 you are haggling over could make a big difference.  Or can it?  What if during the course of that one week rates went up?  Would that $5,000 be worth it then?  Let’s take a look. 

If you were buying a home for $300,000 and rates were fantastic, then your monthly payment may be exactly what you were hoping to spend (or close to it).  However, instead of taking advantage you spend the next week or two negotiating another $5,000- $10,000 off the price and over that time the market shifts.  Maybe it’s as little as a ¼%, and if it is, that is probably minimal, and not worth the trouble, but what if it adjusted by ½% or worse case a full 1% (similar to a 2 week movement in November/ December 2010!)?  

Cost Decrease       Rate increase        Payment increase          30 year cost                                                              

$5,000                      1/2%                         $65/ month                          $23,400

$5,000                      1%                            $157                               $40,820 

This is a big difference, so ask yourself…was the extra $5,000 worth it?  Certainly not, but maybe $10,000 is worth it?  Let’s take a look:   

Cost Decrease       Rate increase        Payment increase          30 year cost 

$10,000                     1/2%                        $37/ month                     $13,320

$10,000                     1%                           $128                            $46,800 

And could you imagine if you spent all that time and the seller did not budge.  Now you are stuck with a $300,000 home and a ½% higher interest rate.  You just lost $92/ month, which is a total of $33,120 over the next 30 years!   We completely understand that in a market like this, every penny counts, and we always want to get more bang for our buck, but there comes a point where it should all make sense.  Rates have more of an impact on the payment than the actual cost of the home.  We all want to wait until the real estate market bottoms out, but typically if you wait for the bottom, you have already missed it.  Warren Buffet once said “Be fearful when others are greedy and greedy only when others are fearful.”  This holds true in the real estate market.  Too many times we get caught up in the media and let our emotions dictate our plans.  We buy stock when it is going up and sell it when it is going down.  Seems silly, right?  What happened to buy low and sell high.  Real estate is the same thing:  If you see a good deal, jump on it.  As long as you are near the low, you can’t lose when times get better.  Getting to the very bottom of the bowl leaves you with an extremely small window of opportunity to get the value and is like trying to catch a falling knife!  He also stated “Price is what you pay, value is what you get.”   Now is a great time to buy!  Give us a call and we can educate you on what your options are.   

Example Home Purchase

Rates up 1% & Prices Steady Rates Steady & Prices Drop 10% Rates up 1% & Prices Drop 10%
Today Probable Improbable Improbable
Home Price Home Price Home Price Home Price
$400,000 $400,000 $360,000 $360,000
Interest Rate Interest Rate Interest Rate Interest Rate
Today’s Rate 1% higher Today’s Rate 1% higher
Principle and Interest Principle and Interest Principle and Interest Principle and Interest
$X $X + $248 $X - $209 $X + $14
Total Interest Paid Total Interest Paid Total Interest Paid Total Interest Paid
$Y $Y + $120,000 $Y - $57,000 $Y + $51,000

Borrower paid PMI VS. Hybrid PMI

Have you ever consider alternative option for Mortgage Insurance for your buyers? How would they react if they know there is an option to pay less monthly MI? I would like to introduce you a product, called Hybrid PMI. It is a unique MI program designed to allow a 1% price adjustment that significantly lowers the monthly MI payment. 

Product

Borrower Paid Monthly (BPMI) Hybrid MI (HPMI)
Premium Structure Regular monthly MI Payments. A 1% price adjustment is selected by the consumer to buy down the monthly MI premium to lower rates.
FICO Minimum 680 720
Refundable Refundable The upfront premium is refundable if cancelled under HPA.
Cancelable Cancelation rules determined by investor. Cancelation rules determined by investor.
Sweet Spot Borrowers FICO <700Note Rate Sensitive BorrowersWill be in loan long enough to possibly cancel MI  720+ FICO BorrowersSimilar structure to FHAPayment and Note Rate Sensitive BorrowersWill be in loan long enough to possibly cancel MI 

Here are the comparisons for monthly BPMI and monthly Hybrid MI assuming a $300,000 loan amount.  See the difference.

LTV

Coverage BPMI Monthly Hybrid MI Monthly % saved on Hybrid
95% 30% $235 $100 57%
90% 25% $155 $45 71%
85% 12% $95 $12.50 87%

How this product will help you and your potential buyers: This product will allow your potential buyers to have a bigger house with the same monthly payment as the borrower paid MI product as shown below:  

Borrower Paid MI

Hybrid MI
Sale Price $350,000 $378,000
Down Payment (5%) $17,500 $18,900
Loan $332,500 $359,100
Interest rate Market rate X % Market rate X %
Term 30 years 30 years
PI $1,784.93 $1,927.73
PMI 260.46 119.70
Total $2,045.39 $2,047.43

 Assuming everything is the same but product type, for a monthly payment of $2,047, the buyers now have an opportunity to shop for a house at $378,000 instead of $350,000 if they chose a Hybrid MI. That is about 8% increase on sale price!!!