*The following is an entry from the Mortgage side of things into the First ActiveRain -- Buyer Challenge ). There have been some wonderful contributions from some very talented Realtors out there. I was asked to throw in what financing options potential buyers had. Here we go.*
Tom & Michelle,
It was a pleasure speaking with you today about the financing options available to you in your desire in buying a home here in historic Allentown, Pennsylvania. I want to first thank you both for the chance to earn your business, as you were referred to me by Colleen Kulikowski. I also want to applaud you in your decision to work with Colleen, as my experience with her has been nothing short of outstanding. She will prove to be a valuable individual to help you find a home that will meet your short term needs and long term aspirations.
I wanted to take this time to briefly summarize a couple of the options we discussed today for your Home Financing Needs. As we went over your application and the supportive documentation I will need from your end, I also wanted to help summarize what we spoke about in terms of financing options. When we spoke, you expressed that you wanted to be in close proximity to an elementary school so that your two young children could have the option of walking to school. That also led to a conversation pertaining to the present and possible plans down the road. Since you're looking to buy a home in the $400,000 price range and you are able to put $90,000 down, you will be able to avoid the infamous PMI we spoke about. You talked about maybe selling the home and downsizing in 7-10 years when your children went off to college. I wanted to reiterate the options we spoke about earlier that seemed to be of the most interest to your situation now and desires down the road:
30 Year Fixed Rate Mortgage (Fixed Rate for the life of the loan)
A more traditional route that has been taken by many individuals and families whom aren't sure of what the future may hold. Heck, who is? While there are many products that prove to be invaluable financial tools for your future, there is a comfortability factor within this product that should not be ignored.
PROS
- Your principle & interest payment will never change. You will know what payment to expect now and 12 years from now should you decide to not sell your home or change your Mortgage situation.
- Rates are typically lower than other products (Interest Only & 40-Year Loans) so you can be sure that you'll be provided the lowest rate the market has to offer, without add-ons for more exotic and sometimes financially savvy loan products.
CONS
- You will be making the full payment, principle and interest, every month as long as you choose to keep the loan. This won't allow the ability to get a lower monthly payment that can free up money for other financial endeavors and future goals.
- There is no flexibility within this product, here's your payment, that's it. Without flexibility, your financial future is somewhat limited.
Conforming Fixed 10/20 IO (This is a conforming fixed loan 30 year where the first 10 years are interest only)
The loan will be re-casted after the first 10 years. So if you pay only the interest for the first 10 years, the whole balance will now be due on a 20 year term. Hopefully you pay a little more than just the interest so the payment won't be so high on the remaining 20 years.
PROS
- This is an excellent financial tool to give you a very low monthly payment, allowing you to free up money to save up for your children's college tuition and to stock away for retirement.
- The payment is fixed for 10 years, which fits nicely into the time frame that you may want to explore downsizing to a smaller home when your children go off to college
CONS
- There is typically an add-on to the interest rate for this option, so you'll be paying a slightly higher rate than you would on a run of the mill 30-year fixed rate mortgage.
- It could turn out that you choose to stay put, even when your kids go off to school. We spoke about this possibility and why it may be detrimental to your financial situation when the loan is re-casted after the 10 years is up. We spoke about the Sleep Principal, a very human & valid element, in any financial decision.
As you folks discuss some of the pros and cons I laid out, I will continue to educate you about the process, the products, and give feedback as needed. I will continue to work closely with Colleen to make sure your transition to the Lehigh Valley and Allentown area is smooth and informed. I look forward to speaking with you further in the next few days and moving forward accordingly.
Regards,
Jason Sardi
First Choice Equity Group Inc.
Mortgage Consultant
610-439-2166 ext. 229
Lola - That is truly a honor for you to even say that. So, thank you much and the check is in the mail:-)
Joan - Your last sentence is so very true! Good luck with your meeting with your own "Tom & Michelle."
Monika - Lol, I'll get licensed in NH and shoot you an email manana:-)
What no Music!!! http://www.youtube.com/watch?v=KZsLmB2Jw8c
Excellant post my friend as usual!!! Good luck... I guess I should go read the others to be sure..
Lol, I used that one already amigo:-( How about this..... http://www.youtube.com/watch?v=5sZTcdrt0g0
Jason - very nice job! I think in this sentence "So if you pay only the principle for the first 10 years, the whole balance will now be due on a 20 year term. " you meant to say if you only pay the interest for the first 10 years.....
http://www.youtube.com/watch?v=EYbUCvz1LYE
Might be a better fit.
Shucks, good point Kim......I will correct. Nice heads up though, darn my late night, off-the-cuff, writing efforts. Thank you!
Carney - You the man, I agree.
Nice Jason :)
I received what may be the most well-written letter today from a lender who expects she'll be representing my client. I was so impressed that I actually read it all the way through. (Imagine that!)
But after reading this, she isn't looking nearly as good. (But then, she wasn't wearing a wife beater either). You've raised the bar on the information a buyer should receive in writing. I can give eloquent primers on lending to my clients, but their eyes glaze over pretty quickly. I doubt any of it sticks. Besides, I'd be thrilled to have a copy of the pitch their lender gives so we can evaluate their options together.
Well done!
Hi Jason, I wanted to comment with out my remarks being influenced by the other comments so I did no read them as yet.
First, this information as you presented it is excellent. I think you actually learned something again that you actually already knew. When you enable a client to make their own "Best Decisions" based a complete set of criteria that is accurate and thorough, you have built a bond that creates a relationship as opposed to just a loan order or transaction.
When criteria is not just spoken but actually put in writing with the benefit of your counsel, you create that relationship based on trust and empowerment.
Most people want to learn but because of the haphazard way things are usually presented, they often move forward but still have fear based on incomplete understanding.
It would be my suggestion, if you don't already incorporate this in your business plan, to make your proposals to your clients in just the same way as it is presented here. This will also afford that your referrals should increase dramatically and you will never need to use the phrase, Trust Me" ..... Because you will have already earned it.
Tom & Michelle get around.
And I want you licensed in my state. Tell Geary to work on that.
Love you and Bob with your dueling YouTube videos. :o)
Jason,
Good luck with the loan:)
Nice set up with the presentation. Good luck in the challenge!
Jason,
I think you did great on this, and you explained it well!! especially as a referral, if that was really the case, then you did a terrific job..
Tom Weiss
Jason,
This is a great letter. I look forward to the opportunity to be able to work with you. If your service fits your letter, I think your clients must be very relaxed and informed. The pros and cons are not generally a thing I get from mortgage guys. This leaves me with the impression that I won't be dealing with surprises later, which is a great thing, because I don't like surprises.
Awesome post Jason!
I rather confident I have never worked with a lender that would provide such detailed information in a letter - it's hard enough for clients to get this information face to face! <G>
Thanks for taking the time to enter the contest.
Now this is what I'm talking about. In my entry I did not give any names out as I wanted the buyer to let me know if they wanted my referrals. I also didn't want to give big loan info as I leave it up to the LO. You know what....you and I should have teamed up and written a whopper of an entry to the contest.
Okay...now go do the the one for David and the VA loan. :)
Kim - Thank you!
Margaret - No doubt about that. By the way, your post was very good, that competition turned out to be a very enlightening, entertaining, and very competitive one.
Ashley - I think that is crucial. There are pros and cons to everything, especially different loan products.
Jennifer - Awwww, how sweet. Thanks. I'd be happy to go over anything you get from another lender, just so your client can and you can have an independent and unbiased second opinion.
William - Very well put my friend. While I think I incorporate this the majority of the time, there is always room for improvement.
Thesa - Thanks, I don't think I'm in the running. I was asked to participate though, so I obliged.
Sarah - I'm working on Geary and I have a feeling the dueling youtube videos between Carney & I has just begun:-)
Missy - Even though I'm not licensed there, we could pretend. I would love to work with you!
Neal - Thank you, I was hoping you'd enter from the Realtor side of things.
Matthew - You and me both, our trade is becoming one more of teaching rather than selling I believe.
Thomas - This is purely hypothetical but the way I try to treat every client. I do a pretty good job at it most of the time.
Diane - You know how to find me:-)
Brigita - I think that is vital in the education process.
Andrew - I would love the opportunity to work with you, sooner rather than later.
Debbie - The letters and emails I send can be a bit detailed, there's always room for improvement though.
Sis - You are killing me:-) I would love to team up with you anytime!!
Diane - Thank you, that's what I get for poor planning. My imperfection shines right through:-) No 2 year ARMS in this market, they are priced ridiculously now and were abused then. I think they'll be back someday...hopefully used more properly.
Hi Jason - love that you entered this contest and your post is terrific. I really like how you laid out their options in plain English and in a format they should be able to easily understand, with both the advantages and disadvantages of each.
When you get licensed in NH, please be sure to add my name to that email to Monika!
Yep, I still do.....
Ann
Excellent article, Jason. This was a pleasure to read. You convinced me! Good luck.
Jeff
Ann - I do too. I had no idea what I was going to write about, which situation that was, or how I was going to go about it. Holy off the cuff batman....and it shows:-0
Jeff - Thanks man, right back at ya!
Maggie - I feel the same about you hun, give me a call anytime, even if just to shoot the breeze.
Annie - Why thank you, I appreciate those very kind words. Hopefully, this helps consumers in some way who may be reading.
This is an awesome post with so much information I don't know what to comment on so I'll just leave it at you are one happening mortgage guy. Go, go, go!
Well done as always, Jason. This is especially helpful for the Realtors who often don't see how we submit scenarios to their buyers. You are such a great asset to ActiveRain! Love ya,
J
Geary - I'm very glad you specified that you are proud to be my associate MOST of the time, otherwise I might lose my reputation:-)
Janet - Awwww, thank you Janet. I love you right back!
Jason- extraordinary post. I LOVE the educational angle. It's one I need to move on aggressively. The Pros/ Cons are excellent.
This sure beats the "Blues Blogs" that seemed to drag on a bit and were becoming your SOP. (Appeared anyway).
While we obtained some insight as to your personality.... THIS informative type of post is what will allow you to reach your goals.
Kudos. A big 5 and a flag feature.
Thank you Rob. Are you saying you don't like my "Crap" posts or as you call them "Blues Blogs"? Lol. Someday you'll get me, they probably weren't what you thought.
You are right about informative posts Rob, the public needs these badly!