Most borrowers don’t start out being
overly qualified and many originators
are already pushing qualifications to
the max to get their clients to qualify.
Thus, any increase in a homebuyer’s
debt load or mortgage payment could
prevent that borrower from qualifying.
Realtors have the same concerns
about interest rates, and know that
their borrowers are concerned as well.
In fact, many Realtors use that information to get borrowers off the fence when
they are having difficulty committing to
a contract. This provides an opportunity
to originators who can offer rate locks.
How does it work? The borrower gets
locked into an interest rate for a specified period of time. The property is
identified as a TBD, or to be determined,
on the documents and the rate lock
goes out for 60, 90 or 120 days.
The lock-and-shop program gives
Realtors and borrowers plenty of time
to find a home, negotiate a price, get
inspections and appraisals and close the
loan without worrying about rising interest rates during that time. Plus, originators can still deliver the loan to
investors within the lock period.
This is an exceptional tool to get
one’s foot into most any Realtor’s door.
They will completely understand the
advantages of having this lending tool
available for their clients.
n n n
These two innovative products — the
2/1 buydown and the lock and shop —
are available to most originators. They
can even be combined because what
benefits builders also benefits Realtors
and vice-versa. It is no longer satisfactory to just be an order taker. It is time
for business plans to shift gears and for
originators who want to continue their
successful and lucrative careers to do
what it takes to become a vital cog for
both builders and Realtors in a rising
interest rate environment. n
2 points for the buydown. Many homebuilders are prepared to pay 3 points to
6 points in the form of closing costs so
they, in essence, have already factored
in an amount to cover this expense,
As you can see, a product like the 2/1
buydown can give originators an exceptional opportunity to get an appointment with a homebuilder or Realtor.
Once in the door, show these potential
referral partners how a partnership
can increase their business. Isn’t that
what being a partner is all about?
Lock and shop
Another product that is becoming
more important is the lock-and-shop
program. Why? Borrowers follow the
news, and are certainly aware that
interest rates are increasing. They
also understand how challenging it is
to find a home today. It has become
such a major seller’s market today that
home searches often take much longer
The concern of many borrowers —
and their Realtors — is that interest
rates can rise to the point where they
no longer qualify for a mortgage or
can’t afford a home in their price range.
<< Grow continued from Page 164 “The concern of many borrowers … is that
interest rates can rise to the point where
they no longer qualify for a mortgage.”