The Early Bird May Get the Worm—but the Second Mouse May Get the Cheese

What do you say when a prospect calls you on the phone just to check rates—but also discloses (or you ask them) that they have already been pre-approved by another lender? 

Don’t let them hang up until you’ve offered to provide them with a “second opinion” to make sure their current lender has structured the loan properly and in their best interest. 

This strategy is designed to make sure you are considered in the running regardless if they have gone to another lender and have been pre-approved.

Now, I'm not talking about rates here. What I am referring to is the structure of “the deal” itself!

Here are some questions to consider when you have the opportunity to provide a second opinion. You may want to print and use as a guide.

Should you decrease your down payment and use your cash to pay off your high credit card debts?  Prospects think they have gotten a lower monthly payment because the lender structured the deal with 20% down and no PMI. However, you might look at the “cash flow” aspect and determine that 10% down with PMI and payoff of a 9% interest rate credit card with a payment of $250 per month is a better way to structure it.

Should you pay “points” or “loan origination fees”?  Explain to your client that there is no free lunch. On a loan amount of $150,000 (for example), by increasing the interest rate ¼%, they would not have to pay $1,500 in points or loan origination fees. The difference in the monthly payment is $24 per month and the break-even point is 62 months. Chances are your client will refinance before the 5 years are up. However, if they say they won’t, ask them what else they could do with the $1,500 they would have to pay at closing. Drapes for the new home? A washer and dryer? Get them thinking about what they could do with the extra money.

Does a no-cost mortgage make more sense for you?  Same scenario as the above question, however, the rate would be a little bit higher to cover the closing costs as well. Here’s a twist—if they are in the market to purchase a home, advise them to ask the seller to pay part of their closing costs.

Did your lender show you how to save thousands of dollars and take 5 years off your mortgage? Show your clients a side-by-side comparison of a 25-year versus 30-year mortgage. For example, on the mortgage amount of $150,000, the P & I payment for 30 years would be $875.36. The interest paid over the life of the loan would be $165,128. For a 25-year term, the P & I payment would be $943.66 (or $68 higher per month). The interest over the life of the loan would be $133,097. So, in exchange for a higher payment of $68, your client would save $32,031 over the life of the loan. This also works well if you are offering a bi-weekly payment plan.

If you follow these strategies, three things may happen to you:

1. You may get a chance to review deals that you never would have done in the first place.

2. You may get more referrals – even if they do not end up closing their loan with you – because you were the one who educated them about it.

3. If the deal with the first loan officer somehow falls apart, you are there to help them.

Hindsight is really 20/20! You not only get to view what your competition is doing, but you get to position yourself differently because all you want to do is give them a second opinion.