Need a Lifeline?

Are Your Clients Paying Too Much for Their Mortgage

There are 3 Lifelines that you can send them.

The typical American household lists housing as their biggest monthly expense.  It is not uncommon for households to spend more than 50% of their income toward housing – more than 12 million based on a recent survey by the MacArthur Foundation.  The survey went on to say that more than 50% of Americans had to make at least one major financial sacrifice to cover a housing payment.  Let’s throw them a lifeline (…& they’ll love you for it)!

Lifeline #1 – Getting Rid of Unnecessary Mortgage Insurance

If your clients bought a house with less than 20% down, chances are that they used mortgage insurance. This is sometimes called PMI, or private mortgage insurance.  The cost of this PMI is typically equal to .5% to 1% of the loan amount annually.  A $350,000 loan could be costing your borrowers $3,500 extra per year – or $291 per month.  Imagine if you told them that they could recapture the expense to remove it in only 2 months.  Although lenders are required to automatically cancel the PMI after the loan balance reaches 78% of it’s original balance through normal payments (this takes 11 years in many cases), most lending guidelines allow a borrower to remove the PMI after just 2 years if the loan to value ratio is 80% or less – verified with an appraisal. 

Lifeline #2 – Credit Has Improved

When you’re young and starting out things happen – from a missed payment on a student loan, to unwinding out of an unwanted cellular plan, your credit can take some hits – things you don’t work out until later.  If your buyers have an FHA loan or a higher interest rate because they were still working through credit issues when they bought their home, perhaps homeownership, having kids, or moving up the corporate ladder a couple rungs has made them more protective of their credit.  Good news, the folks with the best credit get the best rates.  There’s a chance your once 1^st time homebuyers are now seasoned homeowner’s paying more than they need to.  Throw them a lifeline and have the Easterbrook Team analyze their ability to save some money.  

Lifeline #3 Increase their Mortgage

Huh? Perhaps your buyers have gotten a substantial salary increase or gotten married.  They have 20 years left on their 30 year mortgage but have goals of retiring in 10 years and living the good life.  If they still had house payments in retirement, they may be limited on their mobility and have to make sacrifices.  Suggest to them that they may want to explore shortening the term of their loan to 10 or 15 years.  Shorter term loans often have great breaks on their interest rates.   They will be living the good life and singing your praises for the advice. 

We at the Easterbrook Team truly mean it when we say the “We Make the Process Easy”. Why? Because we have great processes.  Let us show you how we can make your loan process the best that it can be.  Want to hear what others say?  Check out our Yelp Page HERE.