Last week, the mortgage markets reflected what would appear to be an ideal homebuying environment; mortgage applications were up 18 percent, reaching their highest level since 2009.
Yet, when looking at big numbers like that, it’s easy to forget this is still a market in recovery, and agents (and the clients they represent) must remain on their toes at every step of the homebuying process. Nowhere is that more important than in the financing stage, and we’ve got three questions you should definitely ask your clients before they begin consulting lenders.
- What are your goals and priorities? Start out at ground zero – what do your clients want to accomplish with the financial component of their home search? Do they want to avoid PMI? Do they want the lowest monthly rate possible? Do they want to avoid government financing? Do they want adjustable or fixed-rate options? These are all basics you should zero in on.
- Are you aware of a home loan’s total costs? It’s easy to look at a home value, look at a 30-year mortgage and run to the finish line, but make sure your clients are aware of all the complementary costs that are associated with home financing, from processing fees, to minimum down payments, to closing costs, to administration fees, to appraisals, to amortization schedules. All are possibilities, and all must be considered.
- Have you looked at anything other than interest rates? Don’t get us wrong, our jaws also drop every Thursday when Freddie revises its historical markers on fixed-rate mortgages. Who would have imagined a 15-year FRM for less than 3 percent? Yet, as indicated in the point above, there’s more to home financing than a single number, so make sure your clients are scrutinizing the complete loan package.
The housing market would appear to be an ideal one for buyers – prices remain competitive, interest rates have fallen to historic lows, and builders, in an effort to sell more new construction properties, are offering appealing incentives. Still remember, though, to be conscientious; if the last four years has taught us anything, it’s to be prepared…for anything!