buyers via a credit on their state income tax. This is in addition to the $8,000. “It’s critical that lenders and other mortgage professionals are aware of all opportunities available to homebuyers in their area,” said Millard. “By combining the Georgia and the federal tax credits, this can be a very powerful incentive for potential homebuyers.”
MARCH 2010 O
CONNECTICUT MORTGAGE PROFESSIONAL MAGAZINE
O www.NationalMortgageProfessional.com
Educate your sales force
34
Let’s face it. Lenders aren’t the only ones selling; it’s in large part the Realtors. So do them a favor and keep them current on tax credit updates and other news that could help them encourage potential first-time homebuyers to purchase. Today, we’re in an economic state where now really is the time to buy. Not only has the tax credit provided an incentive, but also interest rates are at an alltime low and home values have plummeted, making this a prime time to own a home. Yes, it’s been rumored that the federal tax credit will be extended again, and some industry experts even believe the tax credit will be available for a very long time until the economy fully recovers. Even if that’s the case, the combination of the tax credit, historically low interest rates and low home values will probably not be available for a very long time, and mortgage professionals need to make certain that potential homebuyers realize this. Let this group know and understand to ensure they’re comfortable with the idea of owning a home. Build relationships with realtors in your community and send emails, newsletters and alerts when news breaks. It’s critical to give this group the tools necessary to sell and to sell well.
Lessons learned … or is it too late? To truly engage potential first-time homebuyers, education is key. For this group, owning a home might be a complete mystery from the lending process all the way down to how much they can
actually afford. This can often be a confusing and cumbersome process that would justify being a permanent resident of an apartment complex. But there are benefits, and these need to be made clear. Additionally, education is critical for mortgage professionals, too. Knowing your target market and their hesitancies of buying a home are important. And obviously knowing everything about the federal tax credit is essential as well as knowing other opportunities available. But according to Millard, it may be too late for some lenders and mortgage professionals to jump on the first-time homebuyer wagon. “We’ve been targeting this market segment for many years,” said Millard. “When others in the industry were turning their noses up at the idea of lending to first-time homebuyers because it wasn’t as profitable, we were. We supported and built relationships with down payment assistance programs because we saw a need to reach firsttime homebuyers. Now, everyone wants to because there is a profit. Unfortunately, we’re hearing from different assistance programs that many mortgage professionals missed the boat by not participating earlier.” But there will always be a demand from first-time homebuyers. And even after April 1, interest rates and home values are likely to still be low for some time; therefore, it would be wise for mortgage professionals to begin building relationships in their local communities now, even after the tax credit is no longer offered, and keep themselves aware of other opportunities available to this market. Cary Reines is executive vice president of Embrace Home Loans, a direct lender for Fannie Mae and Freddie Mac, approved by the Federal Housing Administration (FHA) and the U.S. Department of Veterans Affairs (VA), and an issuer for Ginnie Mae.
Web: www.appraisalsanywhere.com
Working With First-Time Buyers By Dave Hershman
The market for first-time home buyers enough of a level of trust? People is as hot as it has ever been. With the trust teachers. government offering tax incentives, One characteristic of a teacher is home prices down and interest rates someone who has a great deal of low, homes are more affordable than patience. Expect that questions will be they have affordable in history. Most of asked repeatedly. Expect your clients to the recovery of the real estate market in not always follow through the way you the past year has been would like. All through focused upon the lower these bumps and bruises, end of the market. you will need to exercise Whether you are a real an extraordinary amount estate agent, insurance of patience. You are not agent, tax professional, their parent. You cannot loan officer or other proget angry with them. You fessional, it is hard not to are their teacher. be impacted by this marHelp them prepare. ket. On the contrary, You have heard this a many are stepping up to million times: An ounce focus upon this segment of prevention is worth a of the market. This is not pound of cure. Nowhere a short-term gold rush. is this saying more “How many times Even when the market appropriate than with have transactions normalizes, first-time regard to the home purgone awry because buyers typically comprise chase process. For examclose to one-half of the people went off in the ple, having them spend wrong direction purchase market. time with a loan officer because there was It is not enough to say getting a pre-approval that you are going to not enough of a level will not only give them focus upon this segment of trust? People trust more confidence to purof the market. Those who chase, it will remove a teachers.” are going to service significant amount of renters must understand stress from the process. that these people have special needs. Questions will be answered, issues The home buying experience will be will be resolved and now, the search their most significant financial transac- can occur with a focus on the goal of tion and it is important for the experi- finding the right home instead of two ence to be a positive one instead of a processes that are occurring at once. nightmare. During the process, do not What are these needs? They need assume that the clients understand someone to learn from. That means what you are saying at all times. Do you should not focus upon this mar- not use technical language and jarket unless you are an expert. You gon that may be common to your should anticipate the questions they profession, but foreign to them. For have and be ready for answers. As a example, when you speak about matter of fact, it would be a great rates fluctuating, do not assume that idea to provide them with a sheet of the clients know exactly how that Frequently Asked Questions (FAQs) in affects their payments. They are your area of expertise. There is so even more likely not to know how much information being thrown at rates shifting may affect their paythese people that they are not likely ments after the tax factor is figured to remember what you tell them. into the equation. They might not Don’t limit this information to FAQs. even understand what the mortgage Also include printed information payment is comprised of and other about the process—including dia- areas they will be responsible for, grams and graphs that demonstrate such as home maintenance. the flow. If you are an expert in your indusYou must think of yourself as a try, you must also align yourself with teacher as well as a businessperson. other experts. The first-time buyers When they see you as a teacher will be looking for recommendations. rather than someone trying to sell Going back to the tax issue, they may them something, they are more like- want to speak with a tax professional ly to listen to your advice. How many who may also be able to help them times have transactions gone awry file forms to take advantage of the tax because people went off in the wrong credit if the state and/or federal govdirection because there was not ernment is offering one for which they