Anyone that has been a loan officer for more than a short time knows that borrowers concentrate on interest rate above all other things a lot of times to their detriment. Borrowers get way more upset when rates go from 4.875% to 5.000% then when they go from 4.750% to 4.875% which just goes to show you how much the Loan Officer can add value by being a consultant rather than a sales person. Being an ex-loan officer of 15 years, I have always found that the best way to speak to borrowers about their loan is about the payment and how that relates to costs, the length of time that they plan on being in the home, and their specific life situation.
I had a neighbor once who I was asked to speak to because they were going to have 3 kids in college over the course of 6 years. Their plan was to sell their home and buy something much less expensive. When I spoke to them I pointed out that based upon what they were telling me they wanted to spend per month they could not purchase a good used car. At the time there was a pretty big difference between a fixed rate loan and a 1-year ARM. If memory serves me correctly the difference was 4.000%. 30 Year Fixed was 8.500% and 1-year ARM was 4.500%. Yes, youngsters interest rates were that high and higher back in the day. So rather than selling their home and buying a shed to move into, they refinanced into the ARM product and got the cash flow that they needed. When rates dropped they refinanced and are still in the home. (At least one of them, Divorce happens!)
The point of all of this is that borrowers a lot of time focus on the wrong this and a good Loan Officer can offer counsel rather than sell to make a sale.
Thanks for your time!
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