How to Ease Buyer Frustration Over the Current High Mortgage Rates

Nov 16, 2022

“America’s housing dream is broken,” claims a CNN.com headline. The New York Times wants us to know that “The Housing Market Is Worse Than You Think.” Finally, CNBC.com resorts to the scary stuff with an article about “… how much equity U.S. homeowners have lost since May.”

Is it any wonder that homebuyers, already fatigued by competing with multiple buyers, watching home prices skyrocket (seemingly overnight) and, now, escalating mortgage rates, are beyond frustrated?

Is it impossible, as many think, to buy a home? While it may be challenging, you and I both know it’s not impossible. At least not for many Americans. They just need a lot of educating, counseling, and, maybe, a whole lot of hand-holding.

Are they aware of the ins and outs of mortgages?

Direct Response Reports. **See more Here.**

Naturally, you’re hesitant to get too deep into the mortgage weeds when advising clients. After all, you’re most likely not a financial expert and, therefore, shouldn’t be counseling clients about financial subjects.

You can, however, suggest that they get to know and understand the following concepts and strategies and talk them over with a lender:

Discount points – Discount points, also known as points, lower a borrower’s “… interest rate in exchange for paying an upfront fee,” according to the experts at the Consumer Finance Protection Bureau. Pass the link on to your clients for an excellent description of buying points and the pros and cons of doing so.
Adjustable-rate mortgage – The loan of choice for the past few months, adjustable-rate loan applications have “… more than quadrupled since the start of the year,” according to Melissa Dittmann Tracey at nar.realtor. This may be the ideal solution for a buyer who plans on staying in the home for a reasonable length of time. Get the house with an ARM and then refinance into a fixed mortgage when rates drop. This strategy is not without risks, however.
Help them strategize coming up with a heftier down payment – Yes, this is a tough one for an agent to suggest. It may mean putting a hot buyer on hold for a time. April, however, is right around the corner, and if your client is expecting an income tax return, depending on the amount, it could go a long way toward helping to lessen the impact of a higher-than-expected mortgage rate.

Keep an eye on the news

If ever there was a time for Congress to act quickly, it would be now. Several bills remain in the works from last year that can greatly ease the pressure on hard-hit, moderate-income homebuyers.

Direct Response Report, **See more Here.**

Keep an eye on Congress because if any of these passes, it could be a boon for your clients.

The First-Time Homebuyer Act of 2021. Introduced in late April 2021, this act revises the IRS code to provide first-time buyers up to $15,000 in tax credits. At the time of this writing, the act sits with the House Ways and Means Committee.
Downpayment Toward Equity Act of 2021. This program will be administered by HUD to “… states and other entities to provide qualifying assistance to certain first-time, first-generation home buyers in purchasing their first homes,” according to the bill’s text.
LIFT Homebuyers Act of 2021. Introduced in September 2021, The LIFT Act will provide 20-year fixed-rate mortgages for “… first-time, first-generation homebuyers whose incomes do not exceed a certain amount,” according to the bill’s text. These loans will be offered by Rural Housing Services or the Federal Housing Administration (FHA).

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Don’t Let Rising Mortgage Rates Negatively Impact your Real Estate Income

Sep 27, 2022

Here’s a truism: Escalating mortgage interest rates freak out potential buyers and sellers. Especially those in the younger age brackets who have only known the low rates we’ve enjoyed over the past several years.

And, it looks like money may become even more expensive to borrow in the near future, at least according to some economists.

How this is impacting real estate professionals

While we hope that you haven’t been a party to a canceled real estate deal, many agents have. In fact, in July, “… 63,000 home buyers backed out of purchase agreements,” according to a Redfin study.

That represents more than 16% of pending contracts, “… the highest share since March and April 2020,” according to Kaitlyn Koterbski at Fortune.com. She goes on to blame “… higher mortgage rates coupled with high prices” as the reason that many buyers have chosen to wait for a better time to buy.

What’s an agent to do?

Now, more than ever is the time to nurture prospects through your pipeline and to encourage anyone in your CRM that has even a smidge of motivation to buy or sell.

Remember, they are most likely getting their housing industry news from mainstream media. To counteract the clickbait and negative Nellies requires that you become more accessible to your sphere of influence. Increase “reach-out” frequency with positive information and answers to the questions that are most likely plaguing them right now.

Hopefully, you’ve made note of how each person in your sphere prefers to hear from you, be it by phone, text, email, or direct mail.

Concentrate on current homeowners, not first-time buyers. The former will have more cash to buy another home, while many of the latter, what’s left of them in the market, typically don’t have a lot of cash on hand and are struggling with finding a decent mortgage rate.

If you have no idea how they like to be contacted, stick with direct mail. It’s the least intrusive method, and it’s also more likely to be seen by the recipient.

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What should I say?

Think like someone who wants to buy or sell but is taking the negative housing market news to heart. Give them some positive news.

Educate them on the various aspects of buying and selling that they may not be considering.

Interest rates are higher than they have been in the recent past, but historically, they’re still low. A lot of us can remember when a 6% mortgage interest rate was cause for celebration. “Historically speaking, we are still on the lower end of the interest rate environment,” according to Jon Reed at Time.com.

Explain to members of your sphere that it’s not wise to try to time the market. By the time it changes, it may be too late to get what they had hoped for in their home. Buyers who try to time the market may be faced with even higher mortgage rates.

“High prices and higher mortgage rates have slowed down the pace of how long houses stay on the market, which opens up supply,” according to Lindsay Moore at MLive.com. Buyers will be facing a more relaxed market, which should encourage those who can afford to buy to get out there and look at homes.

Renters. Now that is one angry group of Americans. The eviction moratorium is a thing of the past, and rents are rapidly increasing. Now, more than ever, tenants are wondering if it’s cheaper to buy a home instead of continuing to rent.

Crunch the numbers in your market and decide if it’s better to buy and send postcards targeted at renters or property flyers to middle-class and higher-income renters, urging tenants to beat the rent increases and start paying a mortgage, not their landlords.

If you’re a seasoned agent, the state of the current market is nothing you haven’t dealt with before. For those agents who are experiencing their first market correction, however, understand how well the basics of marketing will serve you right now.

Think like your potential clients and serve up some knowledge and advice. Consistently.