New Buyers Agent? Be sure to Convey these 3 Mortgage Warnings to your Buyers

Sep 23, 2022

As a new buyers agent, you may still be learning the ropes. Now is the time to cultivate good habits and avoid making the mistakes that many other agents make.

One of the most prevalent among the latter is assuming that your clients know what they need to know during the home buying process.

In reality, most first-time buyers know little, if anything, about buying a home and are counting on their agents to guide them through the process.

Do them a solid and share with them the following 3 warnings.

1. Getting preapproved for a mortgage is non-negotiable

“For 41% of recent buyers, the ﬁrst step that they took in the home buying process was to look online at properties for sale,” according to the NAR’s Profile of Homebuyers and Sellers.

Yes, the prospect of buying a home is exciting, and without knowledge of the process, some folks jump right over the baby steps of shopping for a lender, loan preapproval, and interviewing buyers’ agents. They hop in the car and start looking at homes for sale without even knowing how much home they can afford.

It’s a recipe for disappointment

Knowing how much they can spend is paramount, both in avoiding wasting your time and theirs.

Then, there’s the fact that sellers and their agents want to see a preapproval letter.

Experienced agents know well the couple that fell in love with a house they found open on a Sunday afternoon only to learn later that it was way out of their price range. Nothing you show them after that will stack up.

2. Help them understand the home loan process

Check this out: “41% of Americans who’ve never owned a home believe 20% down payments are required,” according to Maggie Davis at lendingtree.com.

These people are first-time homebuyers who are absolutely clueless about down payments. Yes, 20% down is best for the borrower, but a smaller down payment certainly doesn’t prohibit them from buying a home.

The First Time Buyer Series is shown above. To see more designs, Click HERE.

So, although it’s a given that agents should counsel their buyers that they need to see a lender before looking at homes, they also need to warn their clients about the out-of-pocket costs involved in the purchase of one. Then, give them the good news about low-down loans and down payment assistance programs.

3. About that final credit pull

Because they aren’t fully tutored on the mortgage process, many newbie homebuyers rightfully assume that once they’re approved for a mortgage, they will remain approved.

They can relax.

Many are so eager to get started shopping for furniture, new appliances, and other items for their new home they run up hefty credit card tabs. Additional credit changes their ratios, and they may find themselves without a home to fill with all those purchases.

Remind your clients that it’s not a done deal until it closes. Changing jobs, making large purchases on credit, and allowing credit inquiries after loan approval have all proven detrimental to many buyers. The lender’s soft pull just before closing should be explained fully to your buyers.

Yes, we all wish that mortgage professionals would pass these warnings on to your clients, but they typically don’t.

Just consider these warnings as part of what we know will be the amazing customer service you will provide all of your buying clients.

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Dazzle with Customer Service: Explain the Mortgage Process

Customer Service

Sep 12, 2018

Win Them Over With Mortgage Savvy

Remember real estate school? What fun it was to learn about such thrilling topics as riparian rights, avulsion, and tenancy by the entirety. Unless you were planning on selling ranch, investment or water-front property, these topics were quickly pushed to the back of your mind once you got your license. Then came the real learning: how to generate leads, work with buyers and sellers and the anatomy of a mortgage.

While you may have had a broker or mentor who walked you through the fine art of generating leads, the mortgage process is typically something we learned on our own, piecemeal.

If, as newbies, we were confused over the mortgage process, think about how clueless your first-time buyers might be.

Get them up to speed

Only 30 percent of them are familiar with the mortgage process according to a Consumer Financial Protection Bureau (CFPB) and the Federal Finance Housing Agency (FHFA) survey. That’s a whole lot of buyers who are blindly entering a huge financial transaction.

The mortgage profession, like real estate, boasts a workforce with a variety of backgrounds, education, skills, and experience. Like our industry, there are those who work hard at providing customer service and there are those who seemingly couldn’t care less.

Sadly, as they do when choosing a real estate agent, the vast majority of homebuyers (77 percent, according to the survey above) choose the first lender they speak with.

This offers the customer-service-oriented agent a brilliant opportunity. Make explaining the mortgage process, from start to finish (and in plain English) a part of your buyer consultation meetings. It’s customer service on steroids.

Go beyond referring your clients to a lender

Surf the internet for home buying advice and agent websites typically offer some form of “See a lender.” This is skimpy advice that adds nothing of value to the reader.

Providing answers to their most frequently asked questions is valuable. What does DTI stand for and how is it determined and what role does it play in the mortgage process? Explain what “mortgage origination” means. What are “discount points?”

Explain the different players who work behind the scenes for a typical borrower. For instance, what does an underwriter do? An infographic or even a text walk-through of the life cycle of a home loan could do the trick here.

And, don’t neglect counseling your buying clients about protecting their credit during escrow (not making large purchases on credit, not changing jobs, not moving money around).

How to get the word out

While a basic explanation during your buyer consultation is a must, your website is another vehicle for spreading the word about the mortgage process. From articles in the “Buying” or “Financing” section of your site to blog posts about different aspects of mortgages (down payment assistance, what to expect at closing, etc.) can all help educate your client.

Getting back to the buyer consultation: use handouts to cut down the amount of time it takes to explain the mortgage process. Start with an explainer sheet or infographic that walks them, step-by-step- through the process. Include a glossary of mortgage terms that they can refer to when needed.

Include a page on various mortgage programs, such as FHA, VA and USDA and another on down payment assistance programs in your area. Then, package them all up in one of our presentation folders for them to take home with them.

Explaining the mortgage process to your buying clients does more than add to their customer service experience. Knowing that they need to hold off on that appliance-shopping trip to Lowe’s or Home Depot prevents a common mortgage disaster.

Also, knowing what to expect during the process allows them to relax into it. And, we’re sure you’ll agree that relaxed clients are the easiest to work with.

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Make sure everyone knows who the expert agent is who will be there for them, answer ALL their questions and guide them in the right direction.

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mortgage education