Mortgage Rate Arbitrage!
This strategy will only work for those markets with homes with prices in the seven figures or so. I know this excludes most of the business we all tend to see, but it is part of establishing yourself as a local professional with market awareness.
Remember how just about every originator in the country was posting about how their new conforming loan limit was now going to $715,000? I sure do. In fact, it was the exact type of email and social media post I tell my clients NOT to be posting on social media or email blasting because it can make you look like every other originator in the country, if not downright stupid!
What do I mean by this? Simply put, when everybody is posting something that they are representing as “special”, and people see dozens of other posts referring to the same thing, they realize there is nothing special about whatever it is you are posting, and they tend to ignore you. Think Chicken Little! At first, they notice, then they ignore you. You never want people to ignore you!
Now to my bigger point, the higher conforming loan limit is costing your clients money! Yes, the new higher limit doesn’t really benefit your customer. Why? Because the rate on Jumbo loans right now is significantly lower than on conforming loan limits.
Let’s do a little mortgage rate arbitrage. You can plug in your own rates off your own rate sheet and I am aware that all prices may vary from investor to investor, but I just went to the internet to a generic calculator and allowed it to select the “average rate for that specific loan amount. What I found was very interesting. The monthly P&I payment on a $700,000 loan @ 7.5% on a 30-year fixed was $4,895. The payment on a $815,000 jumbo loan @ 5.9% was $4,834 for the same 30-year fixed rate loan. That is like getting $115,000 for $61 a month LESS.
Imagine the conversations you could have with accounts and financial planners, or even those agents working the higher end properties in your market? What if you ran your own numbers to see what you could deliver and the conversations you could be having? Might just be a point of differentiation that sets you above the others!
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