Real Estate Branding: Consumers, Commodities & Cameras – Onion Juice Podcast – Dec 4, 2017

We are beyond excited to jumpstart our Onion Juice Podcast partnership with:

Episode 116 – Real Estate Branding

Most people think that branding consists of your logo and a slogan that you pitch on your website and social media.

Our very own CIO & Chief Strategy Officer, Jason Frazier, joins Neil Mathweg to talk about what branding really is, common misconceptions associated with branding and how real estate agents can build a strong brand that helps establish trust.

3 Pillars of Real Estate Branding

Do your customers choose your brand first? This question gets right to the heart of branding. Branding isn’t about logos or slogans.

Branding is about forming a relationship with your customers — a relationship where they know your brand, they like it and trust it. Jason says branding is “what consumers say to other consumers about your business.”

Do consumers know about you? If they do, do they like working with you? Lastly, but most important, do they trust you?

These are the three critical pillars of growing a successful real estate business. Listen to the rest of the conversation to hear more about building a strong brand!

Commodity vs. Brand

There has been a recent shift in how people approach buying and selling real estate. Everything looks the same, agents are all using the same techniques and pitches, companies are trying to feel more personal and individual agents think they need to look for corporate.

Essentially, the real estate industry is being commoditized.

Jason shares that a commodity just results in a simple transaction, but a brand creates an experience and a uniqueness that people will want to experience over and over.

Camera-first Branding

For a long time, “branding” referred to your logo and slogan or the print material your company produced. In today’s camera-first world, logos and slogans are hardly relevant anymore, certainly in the real estate world.

Consumers relate to people, not slogans.

Jason Frazier says “the about page on a realtor’s website is the second most visited page,” a sign that people care more about who they are working with than what the company logo looks like.

If you are a real estate agent publishing content, don’t worry about polishing the content or making everything perfect, your clients don’t care, I promise!

Publish content, be personal and vulnerable, and make mistakes…it will pay off in the end!

Real Estate Branding Tools & Tips

Unlike your video and social media content, there are a few things Jason Frazier says every real estate agent NEEDS to do.

Take the time to set up a professional email.

It’s easy for free mail services to be replicated by malicious parties posing as you, which can cause huge headaches and even potential scams directed at your clients.

I am not going to work with a mortgage lender whose email ends in @gmail.com. It’s risky sending personal information over those channels and it makes it harder to establish trust.”

Get your own website in addition to a corporate bio page.

This offers some flexibility regarding the look and feel, allows you to present your personal brand, and “travels” with you if you decide to leave that company.

Jason also introduces an amazing service called G Suite, that allows you to streamline your process if you have multiple domains and emails to keep track of.

Listen to the Podcast below:

Episode Outline

  • [7:45] Neil introduces Jason Frazier
  • [10:30] The 3 pillars of branding
  • [13:00] How a strong brand can help you build trust
  • [17:15] Commodity vs. brand
  • [21:15] Why your “about page” is the most important page on your website
  • [26:45] Adopt a professional approach
  • [30:30] Jason explains G Suite software

Resources and Links

 

Do I Need a Mortgage Pre-Approval?

WHY You Need a Pre-Approval

 

 

If you’ve thought of buying a home, you’ve probably heard that one of the very first items on your ‘to do’ list needs to be obtaining a pre-approval from a lender.  Not a pre-qualification.  Some of the more common reasons on why a pre-approval is necessary involve making sure a credit profile is up to par, making sure your scenario meets lender guidelines, and giving sellers a warm & fuzzy feeling when you walk into their home.  These reasons are

Mortgage preapproval is necessary for the best homebuying experience
Getting a pre-approval is non-negotiable if you’re serious about buying a home, especially in a competitive market.

important, but what about the “perfect” buyers?  The ones with modelesque credit, tremendous income, lots of 0’s on the end of their assets, and an overall profile that has bankers knowing at their doors.  Well, they need a pre-approval, too.  A full and complete one.  But WHY?  We’ll get there.

 

 

The Basics

 

If you’re not pre-approved and you’re not a “perfect” buyer, you’re kind of wasting everyone’s time (we say “kind of” to be kind).  But think of it this way – you’re asking a real estate professional to take time to meet you, learn your wants and needs, and to spend time finding the perfect place for you to call home.  THEN, they’re meeting with you to tour these homes, hear why you don’t think they’re so perfect, and go back to find more listings for you after getting feedback.  Nobody’s complaining, as that’s part of an agent’s job, but would you do all of that with 0 chance of ever seeing a dime of compensation?

 

 

Let’s face it though, you’re a decent person so you probably care about your real estate professional that’s working their butt off for you, but what’s really important is you.  Do you want to go out, fall in love with a certain price range, style of home, or area, only to find out you’ve got no chance at buying, or a few years to go before you’re going to be able to buy?

 

 

In a hot market, the time between putting in an offer and agreeing to close is often one way to gain an advantage in a multiple offer situation.  Even if you CAN get preapproved, there may be some work that can be done along the way to improve your rate and terms – with a short escrow or contract period, you may not have the luxury of that time.  Wouldn’t it be nice to have some extra time to consider these things that could potentially save you thousands of dollars.  With a pre-approval, you’ll have that time.

 

 

If you made it this far and are still thinking “But I’m PERFECT!” this next one’s for you:

 

 

Let’s say you’re in a hot market and are working with an agent that’s agreed to show you homes sans pre-approval.  You find THE ONE.  This home is nearly as perfect a house as you are a buyer.  The listing agent demands a pre-approval letter when an offer is submitted.  “No problem” you think, and you call your Mason Mac loan officer to work on the pre-approval.  Your loan officer gets back to you in what seems like no time at all, your agent gets ready to send over your offer, annnnd just like that, it’s gone.  While you were getting your pre-approval, someone (less perfect of a buyer, no doubt) came through with the pre-approval they obtained before they looked at the home, and made the seller an offer they couldn’t refuse (even if the offer was less desirable than yours may have been).   You just lost the home of your dreams because you didn’t have a pre-approval.

 

The Bottom Line

 

A full pre-approval protects everyone – your lender, sellers, your buyers agent, and most importantly – you.  Is it an inconvenience?  Not if you’re serious about buying a home.  If anything, it just gives you a head start by providing your lender with documentation they’ll need anyway once you find a home.  If your real intent is to buy a home, a pre-approval prior to looking at homes is a must.  Especially in a hot market, you don’t want to miss out on a chance at your dream home because you don’t have your pre-approval completed.

3 Useful Tips for First-time Homebuyers Trying to Navigate the System

3 Useful Tips for First-time Homebuyers Trying to Navigate the SystemWhether you’re tired of renting, need more space or want to make an upgrade, buying your first home is the solution. However, if you’ve never bought a home before, the experience can seem a bit daunting at first. Let’s explore a few useful tips that are helpful for first-time homebuyers who are new to the process of buying real estate.

Tip #1: Begin With The End In Mind

Before you start exploring local home listings and shopping around, it’s worth asking yourself both what you ‘need’ in a home and what you ‘want’ in a home. For example, are you single or married? If you are married or are likely to be in the near future, are you planning on having a family? Will you need space for pets? What area of the city is most convenient for your commute? And so on. If you start by knowing exactly what you need, it will be that much easier to narrow down your options.  Short and long term considerations are important when making a financial and lifestyle decision as big as buying a home.

Tip #2: The Market Determines The Value Of A House

The second tip to keep in mind is that your local real estate market is what determines how much a home is worth. What you can afford has nothing to do with a home’s value, nor does your opinion of its current condition. In some cities, homes will sell with the intention of being torn down after the purchase completes.  For this reason, we highly recommend working with a local real estate agent that knows the market place inside and out.

Tip #3: Let the Market (and your Real Estate Agent) Make Your Offer

Finally, when you’re ready to make an offer, it should be decided upon to offer a price reflective of the market you’re in.  This is where working with a buyers agent can be a huge advantage over going at it alone.  If you’re in a strong seller’s market, you may have to make a high offer and forego some contingencies to be competitive.  In a softer market, you can afford to make an offer that’s more open to negotiations.  Your real estate agent can show you comparable sales and give you a detailed analysis of the local market to help determine where your offer should start.

 

Before you’re ready to buy your first home, please be sure to reach out to your local Mason Mac loan officer and they’ll get you prepared for a successful home buying journey.

Shopping for a Mortgage – A How To Guide

When it comes to getting a home loan, many people struggle with where to find the best loan for them.  Shopping for a mortgage is different than shopping for a toaster.  With a toaster, you can go on Amazon or walk into a store, pick the toaster, pay for it immediately, and if it doesn’t work the way you like, you can return it.  If the price changes at the register, you can opt to put it back on the shelf.  If it breaks the first time you use it, it should be an easy return.  A mortgage is a bit more complicated.  There is no return policy, and if rates and fees end up higher than advertised, sure, you have the option of “putting it back on the shelf”, but it may mean missing out on a home you love and a ton of wasted money.

Most people know that shopping for a mortgage is the way to go when looking for the best loan, but few people know how to shop for a mortgage loan.

 

Mortgage shopping tips
It’s important to not only know TO shop for a mortgage, but HOW to shop for a mortgage

Get Referrals

The best place to start when shopping for a mortgage is where other people have had success.  Talk with friends and family and find out who they used, and if they were satisfied.  Talk with your Realtor and see why they recommend the lender they do.  Referrals are a great way to put together a short list of potential lenders that you’ll want to work with.

Keep in mind, online reviews are NOT referrals.  Many companies and individual loan officers game the system online, obtaining fake reviews and testimonials to paint themselves in a good light.  While some reviews are accurate, it’s tough to tell what’s real and what’s not online, so personal referrals are a much better option than seeking out highly rated online lenders

 

Get pre-approved

You should only have to complete a full loan application with one lender in order to get started on shopping.  With one pre-approval, you’ll have the information every lender will need to quote you rates and fees – your credit scores, your debt-to-income ratio, and all of the other info required to get you an accurate quote.  Keep in mind though, you’ll want a full pre-approval.  If a lender doesn’t request your financials or tells you they don’t need to pull credit for a pre-approval, there’s no way they can give you an accurate quote – this is a red flag to find a new lender and FAST!

 

Do your shopping on the same day

Once you have a short list of referred lenders, do all of your shopping in as short a time window as possible.  The reason is that mortgage rates change daily, and sometimes several times in a single day, so calling lenders on different dates is going to result in a really poor comparison and cause a lot of confusion.  If you compare lenders on the same day, you’ll get an idea of who has the best rates and prices, and you’ll truly be comparing apples to apples.  Getting quotes spread out over a period of days or weeks could end up costing you a lot of money by not having accurate information.

 

Focus on rate and fees

Some lenders have great rates but astronomical fees.  Others have no fees but the rates are ugly.  Lenders fees and rates are effected by a lot of things – their loan officer’s compensation, operations staff, marketing, and more, so it’s important to remember the cheapest lender may not provide the best mortgage experience or the best loan.  And the lender with the lowest rate may have a poorly paid and inexperienced staff that can either make the loan process a nightmare, or worse, cause you to lose out on a home!

Your best bet when it comes to cost is to find a lender with competitive rates and competitive fees.  Usually the ones that are lowest aren’t the best companies, and the ones on the higher end are unnecessarily expensive.

 

Avoid Big Banks

Think of the companies you constantly see in TV advertisements, on arena floors or stadium walls.  Now think about how they get the money for those big advertising budgets.  Did it sink in yet?  Using big banks with huge advertising budgets usually means you’ll be paying a premium in rate or fees so they can cover that expensive marketing.

Bigger banks are also notorious for a sloppy loan process, due in large part to their size (files are often transferred from one department to another, without each department knowing the loan file inside and out).

For the best service experience and lower costs, you’ll generally have better luck with a mid-sized or smaller lender that doesn’t need to charge people to cover for a multi-million dollar marketing budget.

 

As a lender, you’d think we wouldn’t want you to be shopping around, but in reality, when a borrower shops it’s better for them and us.  When you’ve already been quoted ridiculous rates and fees, you’ll more easily see the value in our well priced products.  And when you’ve spoken with a loan officer from another company that seems to not be able to get you off the phone fast enough, you’ll appreciate our team’s dedication to asking the right questions to ensure you’re getting the right product.  We know that not every lender can match our level of service, and we know that we’re very competitively priced, but you won’t know it unless you shop.  So we hope with these tips, you’ll be able to feel comfortable when seeking out a mortgage loan.  And if after you’re done shopping for a mortgage, you decide Mason Mac is the lender for you, we’ll be here waiting to help!

Should You Use a Local Lender?

If your local lender is our team at Mason Mac, then yes, you should always use the local lender.  We kid, we kid…ok, maybe we’re serious.  There is a perception when shopping for a mortgage that’s often shared by real estate agents, and that is that the local lender is always a better option than a non-local or national lender.  Sometimes, that’s an accurate assumption, but there are many reasons why working with someone other than the lender next door may be your best bet when getting home financing.

 

Is it better to use a local mortgage company? It’s best to use a GOOD mortgage company

The Mortgage Process is Automated

Document storage and transfer within a lender?  All done via computer.  Locking a loan, setting up a loan, and processing the loan from start to finish?  All done on a computer and over the phone.  Everything in the mortgage process is automated, so whether your loan officer and their loan team are next door or several states away, if they’re good, your experience getting the loan will be good, and vice versa.

 

Your local is someone else’s far away

A common refrain amongst people with bad experiences with non-local lenders is “I used someone that wasn’t local and had a terrible experience, so I’ll never do that again!”.  The problem is, whoever that lender was that provided the terrible experience is likely right around the corner from lots of home buyers, home owners, and real estate offices, so that terrible experience is likely the same for them as a “local lender” as it is from afar.

Lenders that provide a less than stellar experience may be far from you, but they’re also someone’s local lender.  Since everything is automated, the experience of getting a loan should be largely the same whether you can walk to your local mortgage office or if they’re 3000 miles away.

 

Exceptions?

The exception when dealing with local VS non-local lenders is face time.  Of course, you can technically “facetime” via iphone, but if you’d like to meet your loan officer face to face and not online, then a local lender would be the better option.  Or if you prefer to handle documentation by physically dropping it off, the local office may be convenient.  That said, if the local lender offers a higher rate or higher fees, are you willing to pay a lot more for that face time?

When going to a local office, chances are you’ll only meet your loan officer, too – probably not your processor, underwriter, or any of the other people that work on your loan file, as they typically work from operations offices.

 

The Verdict

Some people prefer to keep things local, but in today’s mortgage market, it’s largely unnecessary.  With the entire process being automated, phone and internet have brought us to a point where you can expect the same level of service and the same product offerings whether your lender is a block away or located on the other side of the country.  If you know how to shop for a mortgage loan properly, you’ll be able to speak with people near and far to determine who to use to get the right mortgage for you.

 

With offices in several states, on both coasts, and scattered across time zones from east coast to Hawaii, chances are Mason McDuffie has you covered, and in being one of the most tech savvy lenders in today’s market, you’ll notice the same great level of service and receive the same easy mortgage process whether you’re a neighbor to one of our offices or looking for a loan from several states away.

Top 10 Tips for Buying Your First Home

Buying your first home is a big deal!  There’s  a whirlwind of feelings involved from the excitement of getting your house keys to the stress of trying to figure out what exactly is it going to cost.  First time home buyers (FTHB) have a lot of questions along the way, and your home buying team should be able to answer each and every one, but reading this list of 10 tips/FAQ answers will put you on the road to home ownership, feeling comfortable and confident.

Buying Your First Home Doesn’t Have to Be a Challenge

 

Get Pre-Approved (or better, pre-underwritten)

 

The worst feeling in the world is finding your dream home, saying “YES! Let’s put in an offer!”, and then swiftly losing the house to someone else while you’re getting a pre-approval, which every serious seller will require with an offer.  Getting a pre-approved long before looking at homes will help you in several ways.  Your loan officer can help you figure out how much you

qualify for and how much house leaves you with a comfortable payment.  They can also review your credit and offer tips on improving your scores (better credit scores = more loan options, better rates, and lower costs).

Even better, many lenders -we may be biased, but we recommend Mason McDuffie ; ) – will get a full underwriting approval for you before you even find a home!  This gives you a huge advantage over other buyers who only have a pre-approval, especially in a seller’s market.  You can put in an offer with no financing contingency, and have the same power of a cash buyer!  To learn more about pre-underwriting, discuss it with your loan officer when applying and being pre-approved.

 

Build Your Credit

 

As we mentioned above, if you start your pre-approval process early, you’ll have time to maximize your credit scores.  This gives you the most loan options along with better rates and terms when compared to lower credit score borrowers.  This can save you money up front, and even more money in the long run, as even small differences in interest rates add up over time.

 

Organize Your Funds

 

Lenders will usually require a 2 month history of the assets you’ll be using to buy your home (down payment and closing costs).  This means 2 months complete statements for things like checking and savings accounts.  If you have many large deposits, money transfers, and cash moving around a lot, this could create a headache in documenting your assets for the lender.

If you can, get your cash together in an account you’ll be using, and keep it there.  This way, your lender can simply review your statements and call it a day without asking you for additional documentation.

 

Freeze Your Credit

 

Since you were smart and went over your credit before looking for homes, you’ve had time to get it maximized and in the best possible spot.  Now don’t move!  Opening new accounts, having people look at your credit, and increasing balances on credit cards can all damage your credit scores, and financing large ticket items like furniture or a new car could sabotage your home buying dreams altogether.

If you must make a financed purchase or open a new account, talk with your loan officer first to make sure it won’t have any negative impact on your home buying plans.

 

Find a Great Real Estate Agent

 

Why is this so low on the list?  It’s not because it’s not one of the most important moves you’ll make in buying your first home.  A real estate agent’s job is to help you find the right home and guide you through the contract process.  But they can’t help you if you aren’t in a position to buy a home, or aren’t even close to prepared.  So we recommend getting well prepared first, but…

It’s strongly recommended that you use a great real estate agent (emphasis on great).  Sure, your 3rd cousin Eddie may have his real estate license, but if he’s not a good agent and isn’t going to give you a professional level of experience and guidance, it’s best to take a hard pass.

Your real estate agent will help you search, negotiate, and get your offer accepted, but that’s only the start – a home buying experience is a paperwork-abundant tornado with multiple people (and their personalities) involved.  When you have a good real estate agent, you have an advocate in your corner, and you won’t notice the craziness behind the scenes (well, at least not as much).  Without a good agent, that craziness is guaranteed to keep you awake at night and turn what should be an exciting time into a miserable one.  Trust us on this one – a good real estate agent is worth their weight in gold, especially when buying your first home.

 

Consider More Than the House

 

You may come to hate even the most perfect house if the commute to work is killing you every day.  You may love the space in your master bedroom, but never sleep there because of street or train traffic right outside your window. Do you love the house enough to live there 24/7 because you have no local recreation or entertainment?

When buying a home, you need to consider the house, the yard, the neighborhood, and the surrounding areas.  For the best buy, make sure you’re buying a home you love in an area you’ll enjoy living.

 

Get Inspections (and a Survey)

 

When buying your first home, you’ll want to know what kind of shape the house is in, even the parts of the house not shown in listing photos.  A professional inspector will be able to give you the good, the bad, and the ugly on the investment you’re about to make.  There’s nothing worse than spending a ton of money on a new home, then getting hit with even bigger bills when the home repairs start piling up.  A home inspector can help you avoid that pitfall, and offer up great advice on maintaining your new home.

If you’ve got land or property boundaries you’ll want to have a survey as well (some states require one).  Knowing what land belongs to you is incredibly important when it comes to using your yard, and putting on additions (and knowing what land is yours when your neighbors do additions to “their” property).

 

Don’t Stretch

 

If your lender says you’re pre-approved for up to $300,000, don’t buy a $350,000 house.  A beautiful house means nothing if you can’t enjoy your home.  A mortgage payment that leaves you strapped for cash each and every month is a major mistake if it means you have no room for savings, financial planning, or fun.  Sure, you’re going to love your home, but make sure you’re buying with enough financial room to enjoy getting away from it from time to time, too.

 

Keep Reserves and Savings

 

Though there are positives to putting down a larger down payment, and sometimes buying points, spending more up front isn’t always a wise move.  Life happens, so you want to make sure you’re leaving room for emergencies.  Having money to address things like a leaky roof or water heater replacement, along with life’s other curve balls, is a smarter move than dumping all of your money into your new home, even if it means putting less than 20% down.

Your loan officer can guide you through the options, and work with you to determine how you can get the most financially savvy mortgage while making sure the other areas of your financial life remain in great shape, too.

 

Think Today and Tomorrow

 

When you’re buying a home, how long will you be calling it ‘home’?  You may need to consider short and long term goals in determining your perfect home.  Do you plan on having a family within a few years?  Maybe that extra bedroom isn’t a bad idea.  Do you regularly have guests and entertain?  Additional bathrooms and an outdoor entertaining area can make the post-party clean up much more pleasant.  Keeping in mind your short term and long term plans & goals will ensure that you enjoy your house today, tomorrow, and however long you call it home.

 

Buying a home is a big deal, but it doesn’t have to be a stressful process.  If you use our tips and hire good professionals for help with your home search and mortgage, the process can be streamlined, and the road to home ownership can be an easy one to travel.  For questions on the home buying process and help with getting prepared, call your Mason Mac loan officer today.

5 Ways Your Lender Can Help You Get the House

In today’s competitive housing market where many areas nationwide are seeing a far-leaning seller’s market with limited inventory, it’s important for buyers to put their very best foot forward and have all their t’s crossed and i’s dotted before they find “the one”.

Most buyers don’t consider just how much their mortgage lender can help them land their

Loan officers can help buyers win in a competitive sellers market
Your mortgage lender should be an asset in getting your offer accepted

dream home, but aside from a buyer’s real estate agent, the lender is the next most important asset a buyer has when putting together an offer.  Using these 5 tips will help ensure you’ve got yourself in the best position to get an offer accepted.

Work with a Reputable Lender

One of the things a listing agent will consider when advising their seller whether or not an offer is a good one is the name of the mortgage company on the pre-approval letter.  Especially in a multiple offer situation, a seller is likely to choose the offer that’s most likely to make it to the closing table on time and with no headaches or financial harm.   That means if your competition is working with a reputable lender and you’re pre-approval is from anonymousmortgage.com or ABClowestrateXYZ Mortgage, you’ll be at a disadvantage with all other things being equal.

It’s a bonus if the listing agent knows the company and has had a good experience in the past.  If the seller asks for their input, reassurance and a seal of approval from their agent can help an offer in getting accepted.  On the flip side, if a listing agent has had a terrible experience with the lender, the seller will likely hear all about it before making a decision.  Choose your lender wisely, and be wary of internet refinance lenders.

Have a Responsive Loan Officer with Stellar Communication

Sometimes that dream home is viewed at 7pm, or 10am on a Saturday.  Sometimes, that dream home will be slightly above the amount on your pre-approval (or maybe you have a pre-approval, but need one for a different amount).  In a competitive market, if you need an update from your loan officer and their business hours are 9-5 Monday-Friday, or if they take days to respond to your questions or voicemails, you’ll be at a serious disadvantage if other offers are going in ahead of yours.

Your loan officer shouldn’t be available 24/7, but a good loan officer is always responsive, always returns phone calls, and has an eye on their email in the evenings and on weekends – after all, the real estate business doesn’t stop in the evenings and weekends.  Your loan officer shouldn’t, either.

Get Pre-Underwritten (and DON’T get “prequalified”)

If your lender hasn’t reviewed your application, your credit, and supporting documentation, then you’re not pre-approved regardless of what they tell you.  A ‘prequalification’ is a flimsy notice that you may qualify for a loan, but it’s not nearly as assuring as a pre-approval, which involves a complete application, credit, automated underwriting, and supporting documentation reviewed by the loan officer.

Better yet, work with a lender that offers a pre-underwriting program to let the seller and their agent know that if they choose your offer, there won’t be any surprises.  With pre-underwriting, your mortgage lender will put together a full file and submit it to underwriting before a property is found.  This way, once an offer is accepted, all that’s left to do is the property-related work – inspections, appraisal, and insurance – giving a buyer the same strength as a cash buyer.  Pre-underwriting says to a seller “we’re better than pre-approved, we’re fully approved pending you accept our offer”.

Your Loan Officer Should Explain Your Pre-Approval ON Your Pre-Approval

Put yourself in a seller’s shoes and consider what looks better:

“Mr/s Seller, this buyer is preapproved” OR “Mr/s Seller, we have reviewed this buyer’s credit, income documents, proof of funds needed to close, and have received an approval through automated underwriting.”

Of course letting the seller know that the loan officer completed a thorough review of a buyer’s loan application is the better way to go – but few mortgage lenders do this.  Make sure you work with a loan officer that does.

Make Sure Your Lender Calls the Listing Agent

Your loan officer should act as a huge advocate when you’re putting an offer in on a house.  Calling the listing agent offers the opportunity to explain your strengths as a buyer, but just as importantly shows the listing agent that the lender you’re working with is professional and a good communicator (one of the biggest complaints of real estate agents is that lenders lack proper communication skills).

When buying a home, it’s a team sport.  Buyers want to buy a home, and sellers want to sell.  A loan officer should let a seller and their agent know that they’re a part of the team, and that they’ll do everything they can to make everyone’s life easy, not just the buyer.  A quick phone call also gives the loan officer a chance to explain the pre-approval process, and gives the listing agent a chance to ask any questions they may have.  Communication is very important in the home buying process, having a lender that’s proactive in this area is a major bonus. If you’re currently perusing your mortgage options, please reach out to one of our Mason-McDuffie Mortgage professionals.

How Does the Fed Rate Affect Mortgage Rates?

Yesterday the Fed increased the target funds rate .25%.  This was the 4th time the Fed has raised rates since December 2015 when it was decided the economy was stable enough to begin increasing rates after a period of recession and a long-running Fed funds rate of .25 (effectively 0% as this is the lowest rate possible).  With ‘rate increases’ in the news so frequently many people panic, thinking the home or auto loan they’re about to get is about to get more expensive.  Real estate agents often tell buyers to “move quickly before the Fed increases rates!”, and some mortgage lenders even use the Fed movements as a marketing opportunity.  In reality, though, the Fed rates don’t have much effect on your home loan rates at all, at least initially.

 

The Fed and Mortgage Rates
The Fed doesn’t impact mortgage rates the way many people think

 

What is the Fed Rate?

 

The Fed Funds rate is the rate at which banks borrow money to either lend or meet reserve requirements, not what consumers pay for loans.  So if you could get a 4% yesterday on your mortgage, the rate isn’t going to change to 4.25% today because of the Fed move.  Likewise your auto loan rates won’t be any different today, either.  The Fed funds rate is more impactful to financial institutions than it is to consumers, at least short term.

 

What does change with the Fed Funds rate?

 

Variable rate debt often changes along with the Fed funds rate.  Credit card rates?  They’re influenced since the Prime rate is linked to the Fed funds rate, so your credit debt or home equity line of credit is likely about to get more expensive than it was yesterday morning. Variable rates on things like student or business loans can also adjust along with the fed funds rate, so these are areas that could see an increased interest rate as a direct result of Fed action.

 

Immediate VS Long term impacts

 

The immediate impact of Fed rate adjustments can act opposite of what most think makes sense.  For example, the day the Fed raises their fund rate, mortgage rates often see improvements – this was the case yesterday, as the Fed raised rates and mortgage rates saw one of their largest drops of the year (and reached their best level of the year).  Consumers (with the exception of those carrying the types of debt mentioned above with large balances) generally feel very little immediate impact from Fed rate changes.  Businesses and banks can feel some immediate impact though, and often times this benefits mortgage bonds at the expense of stock losses.  Typically, Fed movements are baked into the markets over a period of time, so unless there’s a surprise on Fed announcement days, stocks and bonds generally don’t see a ton of movement.

Long term, Fed rate increases are done in economically improving environments to combat inflation (or the potential for it).  Since inflation is the arch enemy of long term investments like mortgage bonds, when it does rear it’s head, inflation can cause mortgage rates to rise, however the direct cause is inflation, not a Fed move.  In economically improving times, stocks generally benefit as well, sucking money from safer but lower yielding investments like long term mortgage bonds and treasuries.  For this reason, mortgage rates can also increase in times when the Fed is raising their rates, but the movements are in correlation, not a result of causation.  But Fed movements can also decrease mortgage rates – along with the announcement of increasing, decreasing, or leaving alone the Fed funds rate, the Fed issues a statement.  If that statement is a negative economic outlook, we often see mortgage rates improve.  In fact, when the Fed began raising their Funds rate in 2015, the economic outlooks that went along with those increases were so conservative, mortgage rates bottomed out for a long period of time.

Things to remember

  • The Fed doesn’t directly affect mortgage rates
  • Both the direction of the funds rate AND the Fed statement is an indicator on where rates may be heading
  • Variable rates, especially those linked to the Prime rate, will rise and fall with Fed movements
  • Avoid scare tactics and dismiss anyone saying that Fed movements will have a negative impact on their home loan rates
  • Economic movements and day to day world events have more impact on short term mortgage rates than Fed changes

Dealing With a Tight Housing Market? 3 Tips to Ensure You Get the Mortgage You Need

Dealing With a Tight Housing Market? 3 Tips to Ensure You Get the Mortgage You NeedIn many cities around the country, real estate prices are on the rise and potential buyers are working hard to find a home they can feel good about. However, finding the right home in a tight market can be even more of a challenge when it comes to striking the right balance. If you’re hedging around the market in the hopes of finding the perfect home, here are some things you should do to ensure you don’t miss out on a good opportunity.

Keep An Open Mind

When wading into the real estate market, it can be very easy to get so enamored with the kind of house you want that you don’t see what’s in front of you. However, not paying attention to the potential of a particular house can mean a missed opportunity that will end up costing you down the road. Instead of waiting around for your dream home, make sure you take a look at homes you might not have thought about as they may end up being a welcome surprise.  You may also consider renovation loan programs.  These products are available to help a home reach it’s full potential, turning a “this house has potential, BUT…” property into your dream home.  Want to learn more about renovation loans, the process, or how easy it can be to finance a property into a dream home?  Ask one of our loan experts questions about renovation products here!

Be Confident, But Not Too Confident

Since many homeowners have history with their home, they want a homebuyer who’s going to be just as invested in their property as they were. On the other hand, though, it’s important not to be too excited about a home as the seller may use your interest to get a higher offer. Instead of playing on opposite poles, show your interest and get into the game with a respectable offer, but be willing to back off if the seller isn’t interested.  To show sincere interest in a house, it may be a good idea to write the seller a personal note with your offer – an approach that doesn’t always sway a seller, but could be the difference if other offers are similar to yours.

Don’t Demand Too Much

Many potential homebuyers have been told to be aware during the home inspection and ensure they get the repairs they’re requesting, but in a tight market you may want to let a few things slip. While ignoring certain items like foundation or roof issues can be a major misstep, letting small things like a broken doorknob or peeling paint slide may be something you can easily remedy that won’t push you out of the game.  Once again, Renovation Mortgages can help in these situations, by turning large up front costs into a small increase in monthly payment as an option to work with an inflexible seller.

It can be complicated to get into the real estate market as a new buyer in a competitive market, but by letting the small stuff slide and being open-minded, you may just find the home you’re looking for. If you’re currently getting prepared to dive into the real estate market, please reach out to one of our Mason-McDuffie Mortgage professionals.

Bonus Tip: Work with a Mason-McDuffie “Buyer’s Best” Pre-Approval

Your loan officer at Mason Mac can get your loan reviewed by an underwriter before you find your dream home, so when the time comes to put in an offer, your buying power is about equal to a cash buyer because a seller doesn’t have to worry about you running into financing issues.  With “pre-underwriting” all of your financials, credit, and everything else not related to a specific property is analyzed and approved by an underwriter, so when you find the perfect home, you can move quickly on that offer.  You can read more about Mason Mac’s pre-underwriting “Buyers Best program” here!

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