Brent Sute

Sow Affordability and Sustainability; Reap Peace of Mind and Sales

bsute@newsouthfederal.com — Thu, 12 Mar 2009 13:02:00 GMT

There are lots of potential buyers out there. Most of the buyers I'm talking with are qualified, but for one reason or another aren't quite ready to make the move when they get to my office. My goal is to put them at ease and show them a way to make it happen while INCREASING their peace of mind. I'll focus on the first-time home buyer since that is where most of my business is coming from these days.

Most of the first time buyers I am talking with really want to buy. However, either they are not willing to make a reasonable offer that has a chance of being accepted, or they are just not comfortable in taking the plunge into homeownership at this point in time. Many are a little nervous about owning a home in today's environment. They read the paper, see the news, and talk with people who may have lost their jobs. The fact is, in our country, over 90% of the workforce is still employed. I know unemployment has risen dramatically in the last few months, but still, people are working. I'm telling my clients that as long as you have a good job and decent credit (620+), it couldn't be a better time to buy than RIGHT NOW.

There are lots of reasons why it is an awesome time to buy, including:

1) Large inventory pool in which to find your dream home;

2) Sellers that are willing to entertain "reasonable" offers and terms allowing buyers to get a great price and perhaps all closing costs paid by the seller.

3) 5% interest rates! Come on! Rates aren't getting much, if any better, despite what your brother-in-law says. (The difference in a 5% rate and the 6.5% rate of 6 months ago is over $152 per month on a $160,000 home.)

4) The $8,000 tax credit. That's right, our government (us) is actually paying people to buy their first home.

5) Availability of programs through USDA and state housing fiance authorities. (In Alabama, you can still borrow up to 99.5% of the purchase price of a home with an income of up to $97,000, and a 30 Year fixed rate in the low 5's. Check with your state housing finance authority for information on their programs.)

Besides pointing out the reasons it is a great time to buy, as mortgage planners we must also make sure that our buyers are doing proper mortgage planning and getting into a loan that is best suited for them. With each of my buyers, I have the "affordability and sustainability" discussion. I use a calculator (you can find it in the Mortgage Coach Library) that determines the ideal range of sales prices my clients should be looking at. Many times I will run this calculator AFTER the client has qualified in order to hit the point home that the loan they are considering does indeed fit into their budget.

The calculator takes into account not only the mortgage payment, but also the ability of my clients to reach their desired amount of cash reserves within 12 months and also pay off all of their non-preferred (credit card) debt within 12-24 months. Basically here is the formula I use:

Net Income Less:

Monthly amount to reach savings goal; monthly amount to pay off credit cards; other monthly payments; and living expenses.

What is left over is what is available for the mortgage payment. I simply translate this payment into a sales price range for a house.

Once my clients see that they can afford the home; sustain the lifestyle they desire; and even reach other financial goals such as getting out of debt, they are MUCH more willing to pull the trigger and buy that dream home. As mortgage planners, we have an obligation to not only recommend the right loan for our clients, but also show them how to balance their homeownership with the achievement of their other goals. This will not only help secure a sale, but I guarantee you it will put you in a different light in the eyes of your clients and you WILL gain their trust, their current and future business, and of course, their referrals. Lenders Who Care is a non-profit organization of like-minded lenders who educate Americans on how to own a home with affordable and sustainable financing. For more information, go to www.LendersWhoCare.org.

What I Learned This Month....It's Simple

bsute@newsouthfederal.com — Sat, 31 Jan 2009 03:06:00 GMT

To say this month was an exciting start to the year would be an understatement!

During the 20 or so business days in January, I bet we had 50+ rate changes.
Underwriting guidelines continued to tighten.
Lenders have come, lenders have gone.
MI companies are much more strict, and pricey.
Risk-based pricing reared its ugly head in the conventional market.
Appraisal values...well never mind.
The government continues to stimulate, dominate, and exasperate.
We have a new president and a renewed sense of optimism by most in this country (and beyond) that is sorely needed.
The stock market continues to tank.
If the government is REALLY buying MBS, why are rates going up?
Only in the mortgage industry do you have massive lay-offs followed by record-level refinance application volumes.
Who's in charge: Bernanke, Paulson, Obama, Bush, Shelia Blair, Kramer (Jim, not Dylan)?
Who's really stimulated with the stimulus package?
Why didn't more clients who wanted 4.25% jump on 4.75% and now are faced with 5.5%?
etc., etc., etc.

What's in store for the rest of 2009? .....I'm not sure, but personally, I'm already tired from information overload. I'm opting for simplicity. I'm going to focus on quality loan applications, and fair, but not crazy pricing of loans. By June of this year, I will know who my top 10 Realtor Referral partners are out of the 40 I'm calling on and they are going to be the center of my attention relative to the building of OUR businesses. I'm going to get to know each and every one of my new clients and make them my friends. I'm going to reach out to my existing clients and let them know I am here for them, as well as their friends and family. I'm going to get rid of all of the "tools" I have except Mortgage Coach and MMG. Simple, I say.

On Monday, my team and I are going to simplify our "system." In fact, we may not have a "system" after Monday, but rather, a "method." Our method will be to just enjoy our clients and make sure their loans close smoothly and on time. Then, we'll ask for referrals.

My point is that we should get back to enjoying our businesses. Stop worrying about the news, the rates, the lending climate, etc. There really is NOTHING any of us can do about those external factors. Focus on making your clients your friends, give them the same advice you would give your mother or best friend, take bullet-proof loan applications, and have fun again.

The key to growing your business in this market (I'm not considering refis growing your business) is to focus on quality and not just quantity. Quality relationships, quality applications, quality advice, and so on.

We have an unbelievable opportunity in front of us. Give thanks, enjoy the moment, and make some friends. It's that SIMPLE.

One at a Time

bsute@newsouthfederal.com — Fri, 16 Jan 2009 17:32:00 GMT

Rate Watch Post Update

bsute@newsouthfederal.com — Tue, 09 Dec 2008 02:39:00 GMT

This post is an update to last week's Rate Watch blog post. My 163 Rate Watch reports went out on Friday. I received several phone calls today and my assistant called about 10 clients, as well.

The results:

Today I conducted 8 consultations over the phone resulting in 5 originated loans. Tomorrow, I've got 7 appointments scheduled so far and expect to have a few more by tomorrow evening.

Rate Watch works. Even clients not needing to refinance want to hear from you. The Rate Watch report along with a letter is the best way to stay in touch with your database and to keep your clients informed. Also, what better segway to ask for referrals than after a 15 minute, value packed mortgage review consultation?

Rate Watch is a no brainer in my opinion.

Today is the Day for Rate Watch

bsute@newsouthfederal.com — Tue, 25 Nov 2008 23:03:00 GMT

Do you Rate Watch??????

America Needs Bold Mortgage Planners

bsute@newsouthfederal.com — Fri, 24 Oct 2008 22:20:00 GMT

SO many local Realtors and lenders and trying to hard to sell their (potential) clients homes instead of offering great advice. As Brian Kludt's earlier post mentioned, TRUST is the key. Hard selling in today's market will do nothing but prevent trust. A commitment to providing sound mortgage planning advice, affordable and sustainable mortgage solutions, and a strict adherence to doing the right thing is THE ONLY WAY TO BUILD TRUST IN TODAY'S MARKET.

First Time Home Buyer Mortgage Planning

bsute@newsouthfederal.com — Wed, 15 Oct 2008 04:23:00 GMT

My main focus in today's market is on the first time home buyer. The key to success in growing market share with this strategy is adopting a MORTGAGE PLANNING MINDSET FOR FIRST TIME BUYERS. Mortgage planning is not just for the wealthy or seasoned home owner. First timers need mortgage planning just as much, if not more than their experienced counterparts.

Here are some of the issues I talk with my FTHB's during our initial conversations. (This is an excerpt from a home buyer counseling book I put together):

8 Keys to Consider BEFORE You Purchase Your First Home:

1) Don’t rush into it. Wait until you have a firm financial footing before diving in to your first home. I’m not saying wait until everything is perfect in your financial world, because if you did that, you would NEVER get your first home. You should meet with your mortgage planner as soon as possible so he or she can advise you on what you may or may not need to be doing leading up to the purchase of your first home.

2) Accumulate Savings. I recommend saving at least $3,000-$5,000 before applying for your first home loan. (This money should be in addition to your 3%-5% down payment.) This will be your reserve account, as well as some money you will use to buy necessary items for your new homes, such as furniture, lawn maintenance equipment, and appliances. Ideally, you would like to save at least 3 months worth of mortgage payments PLUS whatever monies you will need to buy the mentioned household items. The key to saving this money is that it will allow you to avoid the dreaded credit card debt –the silent killer, the easy money, the before you know it, you owe $10,000+ 29% interest debt.

3) Pay off as much high-interest debt as possible. By saving enough money to pay cash for most of your purchases, you can break the cycle of credit cards if that is where you find yourself before you get your mortgage. Once you have your cash reserves saved, focus on paying off all high-interest credit cards or cards that will adjust to high rates in the near future. Your new home will be much more affordable and you will have more peace of mind without the burden of the credit cards hanging over your head. Plus, you will be able to afford MORE home without this kind of debt.

4) Keep at least one, but no more than three credit cards open with as low of a balance as possible, and as high of a limit as you can get. This will dramatically help your credit scores and possibly help you qualify for a lower rate on your mortgage and auto loans.

5) As mentioned in #4, get your credit scores as high as possible. Most people these days can qualify for an FHA loan with at least a 600 credit score. This is a rough rule of thumb in which some people with scores under 600 may qualify when others with credit scores over 600 may not. With a credit score of at least 680, you may qualify for a good rate on a conventional loan. Ideally, you want your credit scores to be at least 720 to qualify for the best rates possible. The average credit score in America is around 700.

6) Create a spending plan. A spending plan, as opposed to a budget, is an ever-changing map of where you are going to focus your cash after your essentials are purchased. You should “budget” a certain amount for household items, medical expenses, utilities, etc. Then, you should carefully plan where you are going to allocate the rest of your money, both in the short-term and long-run. This is where you will map out when and how you are going to pay off your credit cards, how much you are going to spend on your next automobile, whether you are going to lease or buy your next car, and how much you are going to set aside for your other financial goals. The key is to begin with the end in mind. See yourself where you want to be sometime in the future financially and navigate a path to get there using a spending plan. Once your spending habits are under control and you are headed in the right direction, you will be better prepared to take on your new mortgage.

7) Complete a rent vs. buy analysis. (Available in Mortgage Coach) You can find rent vs. buy calculators easily on the internet, or you can contact your local mortgage planner for help in this area. Understanding the benefits of renting vs. owning will dramatically help you in your decision making process when it comes to go for your new home.

8) Make contact with a realtor. The absolute best way to find a realtor that suits you best is to ask people you trust who are, or were in similar situation as you for a referral. There are MANY, MANY realtors out there. Some are better than others. Some realtors may specialize in areas of expertise that do not match up with your needs. For instance, if you are a first-time homebuyer, you might not want to hook up with a realtor who focuses on $1 million homes. Once you have been referred to a particular realtor, do some research about the realtor. Check out their website and/or their company’s website. Look to see what homes they have listed and if they are in your price range. (Note: you are not limited to a particular realtor’s listings. However, I recommend that you use one realtor as a buyer’s agent to buy any home in your area.) You may want to check with your local realtor board to make sure they are in good standing with the board. Finally, set an appointment to meet the realtor to see if you have a basis for working together. Make sure they understand your needs and your time frame for buying. Also, take careful notes on what they advise you to do before, during, and after the purchase of your home. This realtor will be your lifeline to a smooth real estate transaction and will be spending many hours researching, showing you homes, and negotiating your contract. Your realtor should be a professional and an expert in all of these areas.

I don’t recommend you “go it alone” without a realtor representing you, especially when you’re buying your first home. There are so many pitfalls to avoid, contracts to negotiate and enforce, and roads to navigate when buying a home. Furthermore, the SELLER pays the commission on YOUR agent when the home sells (they listing and buyers agent generally split the commission offered by the seller.)

Lenders Who Care - Now More Than Ever!

bsute@newsouthfederal.com — Wed, 08 Oct 2008 13:31:00 GMT

Are You a Lender Who Cares?

See It, Plan It, then Do It

bsute@newsouthfederal.com — Thu, 25 Sep 2008 16:13:00 GMT

As you have heard about 10,000 times over the past year, we are in an unprecedented market. Never before has there been more uncertainty, more volatility, or more change. The booming real estate market cooled (or worse in some markets) and Fannie and Freddie are now at the control of the federal government. Heck, the future of our whole financial system may be in the hands of the politicians we put into office to represent us.

So what?

What does this have to do with YOU? YOUR business? YOUR family's well being? You cannot control the events on Wall Street, Washington D.C., or on the court house steps. However, you can control how you react to the market around you. In fact, your well-being and sustainability in this business depends on your PROACTIVITY now and in the coming months.

Read the news, look at the legislation being proposed, watch CNBC, and listen to Jim McMahan, Barry Habib, Bill Dallas, and others in the know. Become familiar with what is happening, THEN MOVE ON. Be a beacon of light for your clients and referral partners. Communicate with them about what is going on in the market. Dispel the myths and focus on the facts.

Go get 10 new referral partners right now. Believe me, there has NEVER been a more opportune time to obtain new Realtor referral partners than RIGHT NOW. Things are in a state of change, including business models, loan officers changing companies, and the types of loans being done in the market. Now is the time to make leaps and bounds in your business. If you take advantage of this opportunity by seizing the moment, you will set your business up for unimaginable success that will last perhaps the rest of your career.

Here are my tips for navigating today's market:

1) Be crystal clear on your vision. Know WHY you are in the business. How do you want those in your marketplace to view you? Your vision must be COMPELLING. Dream big. Anything is possible.

2) Become familiar with today's financial landscape. Know where the opportunities are going to be.

3) Plan your business around your strengths and 3 or 4 unique selling propositions (USP's). Become the expert in your marketplace in your USP's. Some examples of USP's would include: Seller Buy Downs, FHA 203K, First Time Home Buyer Programs, etc.

4) Prospect, prospect, prospect. Spend as much time EVERY DAY in prospecting new partners. Now is the time to add new referral partners and you should be going for the top 20% in your market or the up and coming agents who have the potential to be in the top 20% with your help in the next year.

5) Focus on building relationships and not selling loans. If you do this, you WILL sell more loans. People don't trust us right now. Earn their trust by focusing on their deepest and most important needs even if it means you don't get the sale. If you do this, the level of trust you build with your clients and referral partners will go through the roof and you will end up with referral after referral.

6) Communicate abundantly. Send a market update email to your Realtors and referral partners at least once per week. I've been averaging 2-3 emails per week the past few weeks. Don't stop with email. Pick up the phone and call 5 Realtors a day. Host a lunch & learn. Give quotes to your local business editor to be referenced in articles. It is up to YOU to get the word on the street that you are the expert in today's mortgage market.

7) Finish strong. Once you get your foot in the door with a prospect, don't stop there! Getting in the door is the first step. It is important, and for most people, the most difficult aspect of cultivating new relationships. Follow up religiously with your new prospects until they become loyal partners. Then follow up some more.

Don't lose heart. Tough times are upon us. However, the opportunities are tremendous. Jim McMahan has said over the years that "Uncertainty breeds opportunity." He also quotes the great Jim Rohn when he says "Don't wish it were easier, wish you were better." Today's market is what he was talking about.