Audio 2: Answering the Question, “What’s your rate?”

Prospect: “I’m looking to buy a home and trying to research different lenders. Can you tell me what’s your rate?” 

You: “Thanks for calling Mr. Smith. I’d love to help you, and that’s a good question. Right now, mortgage rates are available between the low 5% range all the way up to the 8% range, depending on the type of loan, your specific situation, and the fee structure associated with the loan. What do you know about what’s happening in the mortgage industry and how interest rates have been fluctuating lately?” 

Prospect: “Kind of. I know rates have gone up.

You: “Yes, indeed, they have gone up since 2020, and they’ve also come down a little lately.  Mortgage rates fluctuate day to day and sometimes hour to hour.  Do you mind if I ask, have you gone through this process before? Have you been fully pre-approved? Or, I guess most importantly, do you know how mortgage rates work and how they work from different lender to different lender?” 

Prospect: “Well, no, not really. Again, I’m just trying to figure out who’s got good or low interest rates.” 

You: “OK, I got it. That makes sense. Do you mind if I help you understand how interest rates work a little better, because I think if you’re really searching for the lowest interest rate, I want to talk to you about the positives and negatives of that strategy. 

Are you open minded to me helping you understand how mortgage interest rates work?

Prospect: “Yeah, that’d be great.

You: “Mortgage interest rates are set by what’s called mortgage-backed securities, and those are traded on Wall Street similarly to how stocks trade, except they trade in the bond market, not the stock market.  Mortgage-backed securities move every day closely in relation to the 10-year Treasury bond. You legitimately could call 10 lenders today and 10 lenders tomorrow, and the best-priced lender today could be the worst tomorrow; you could literally get 10 different answers tomorrow than you got today.  And the reality is there’s approximately 23 factors regarding you, the property you are buying, and your down payment amount that go into pricing in the exact rate you qualify for at any specific moment because rates are literally always fluctuating. 

Have you called other lenders, and have they given you an interest rate?

Prospect: “Yeah, quite a few.” 

You: “I bet you are a lot like me in that you don’t want to overpay for anything, but a cautionary tale here: most of those lenders, unless they’ve asked you those 23 questions, they’re just trying to sell you on the lowest rate possible to hook you in, and then they will maneuver that interest rate later based upon where your actual situation lands. Personally, I don’t feel comfortable doing that. I feel like it would be irresponsible of me, and as a fiduciary, I want to give you the exact right numbers. What do you know about how discount or buydown points work and how you can manage your cost versus your interest rate?

Prospect: “No, I’m not really aware of that.” 

You: “Okay, for example, you can go and look on a website, and they’ll have an interest rate posted, and in the fine print, they might disclose that rate comes with two points, and it assumes a 40% down payment, and it requires an 800 credit score and so on and so forth. But no one ever pays attention to the fine print. They just look at the interest rate, and that’s the hook for most mortgage lenders. 

The reason you’re likely calling us, either you saw reviews or you referred to us, is because we let you look behind the curtain and help you determine what’s the best interest rate for you, your situation today, but most importantly, for your situation over the next 6 to 12 months ahead.

The reality is, the interest rate you take today, you will almost certainly not have for very long because mortgage rates have already started their cyclical downturn.  How you structure the cost in relation to your interest rate is going to be more important than the interest rate you pay in the interim.

Now, I know this is a lot of information, and I’m not sure if it’s for you, but I would encourage us to go through our process. I can ask some questions, and then in our consultation, I can get very detailed around what interest rate is appropriate for you and why. And then you’ll have all the information you need to make a fully educated decision. 

I think you deserve that because if you just keep calling people, asking for interest rates, you’re going to get a lot of salespeople and unfortunately, not a lot of consultative advice. Are you open-minded to us starting this process and we can learn as we go?

*Prospect’s realization at the end of the conversation: “Okay, there’s a lot I don’t know about this. Asking what’s your rate to a bunch of different lenders is essentially not a good strategy because I’ve just learned that it doesn’t make sense, and this guy has taught me something that no other lender has taken the time to do. So I’m going to stick with him a bit longer to really understand what’s happening.

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