In today’s dicey lending environment, many a would-be home buyer often falls into one of two camps: uninformed or running scared. Unfortunately, tightening lending standards and a pervasive unease about the overall economy have combined to keep many potential buyers on the sidelines of homeownership. In many cases, however, proper guidance on the available loan products could have shown them that not only is a home purchase achievable, but affordable as well.
Jim Monninger, Senior Loan Consultant for First Trust Mortgage Corporation, works on the front lines with account executives and loan officers to ensure they are equipped to properly guide buyers through the variety of mortgage options available to them. With more than 20 years experience in the mortgage industry, Monninger understands that effectively working with home buyers in today’s challenging economic climate requires lenders and real estate professionals to possess a comprehensive understanding of all available options.
Buyers today are confused, says Monninger. “People were able to get a loan three years ago and they’re trying to understand why they’re having a more challenging time qualifying for a loan today,” he explains. “Real estate professionals and loan officers need to understand what products and services are available and then translate that information for the buyer.”
While most home buyers today are, understandably, focused on getting the best rate when it comes to securing a mortgage, that does not always translate to securing the lowest possible payment, Monninger explains. “Buyers need to know what the best deal for them is,” says Monninger, “and they can’t just go on one criteria – the rate. While it may seem counterintuitive, they need to understand that the lowest rate may not mean the lowest monthly payment.”
One of the options that real estate agents and loan professionals need to become better versed on is mortgage insurance (MI), says Monninger. While many buyers view MI as just another fee that gets tacked onto their payment, MI is actually becoming an increasingly desirable option for low-downpayment buyers, especially in light of recent changes that have made FHA loan products more costly.
According to Monninger, MI is not a difficult concept to understand; it’s just a product that many haven’t dealt with in a long time. “If you look at what MI does compared to what it costs, it’s obviously well worth it,” he explains. “An important part of our obligation to buyers is to get out there and explain the benefits of MI.” MI products, for example, can help buyers achieve homeownership sooner by qualifying for loans with smaller down-payments (sometimes as low as 5% down) and work to help them keep their home if they run into future financial difficulty, while protecting lenders against the risks of a low-downpayment mortgage. MI also offers flexible premium payment options, which can be canceled once the home reaches 80% of its original value.
“Real estate professionals and lenders need to understand all the available resources that will help them work more effectively with buyers right now, and MI offers some huge advantages,” says Monninger. “Back when the market was rocking, lenders had the ability to find a loan product for just about anybody. But these days, we really have to employ our problem-solving skills as opposed to just applying the first product that fits. Today, lenders and real estate professionals have to get back to the fundamentals of how to develop and work with buyers. It’s about listening to what is important to your buyers and figuring out what their best options are. ”As home buyers increasingly turn to the Internet and other sources to become more educated prior to the home-buying process, real estate agents need to become more educated on the financing options, advises Monninger: “Even if it’s outside of your expertise, it’s really important to know the entire industry…not just your part of the industry. You don’t have to be a subject-matter expert on every facet, but if you want to be in that top 10% of real estate professionals, you at least need to understand the options.”
“You have to look at what will help you stand apart from the crowd,” adds Monninger. “When Realtors understand all the loan products out there, that puts them ahead of the game. ”Monninger also encourages real estate and lending professionals to be proactive in community outreach efforts to educate consumers about financing options, like MI, that can make homeownership affordable for many who currently believe the American Dream is out of reach. “For the mortgage industry to really get back to a position of credibility, we have to prove that the consumer’s goals and desires are important to us,” says Monninger. “Whether it’s FTMC, loan officers, Keyes real estate professionals…we all have to work together as a group to help everybody achieve their respective goals because when I’m successful, you’re successful…and most importantly, the consumer is successful.”
Call me to work with a Realtor that understands how the mortgage industry works, I can help you!