Setting Yourself Up to Succeed in the New Year

By: Megan Anderson, Vice President of Public Relations

A new year always brings new opportunities. It’s the time of year where we begin to think about the future. What’s next for us? What goals need to be readjusted? It is also the time of year where we reflect on the past to see where we excelled and where we fell short.

Aside from our personal and business goals, a new year can also bring a new market. In today's blog, we will discuss important ways to plan for the new year, along with crucial MBS Highway tools that can help you and your business thrive and make a positive impact on your clients in any market.

Knowledge Breeds Confidence

One way to thrive and make an impact in any market is to embody and exude confidence. When we feel confident, our clients and referral partners sense that and they, in turn, trust us. People do business with people they know, like and trust. Having confidence helps us build relationships and increase conversion.

A few years after I started working at MBS Highway, Barry Habib asked me to be on the Morning Update video. This is a daily video where we break down the various economic and housing reports and how they could affect the market. We advise originators on when to lock and float.

The first time we filmed, it took me ten takes and the second I got off camera I burst out in tears. I felt so uncomfortable and lacked confidence. But instead of saying no to an amazing opportunity, I started to study. I woke up early to read about the reports. I continually reviewed the Certified Mortgage Advisor course to really understand the various reports and why they mattered.

By studying, practicing and being willing to learn, I increased my confidence. And now, just a few short years later, I’m asked to speak at conferences all over the country on market outlook and forecasts.

In today's world, it is not enough to simply get mortgages done. You must be a financial advisor to be competitive. You can do this by starting how I did – watch MBS Highway’s Morning Update video every day. And after you watch it, try to articulate what you learned to others around your office.

The more you teach market information, the more you begin to understand it. The more you understand it, the more confidence you’ll have. And the more confidence you have, the more likely clients and referral partners will want to do business with you.

Overcoming Points of Friction in the New Year

Now let’s discuss some issues we’ve been experiencing that will likely continue into the new year and how you can overcome these points of friction to grow your business.

Nationally we are short on housing inventory, while demand has been growing exponentially. This tight inventory has left many potential buyers asking themselves, “Should I buy, or should I continue to rent? And if I do buy how much better off will I really be?”

Be honest with me, can you answer that? And if you can’t who is supposed to? After all, aren’t we supposed to be the trusted advisors? This is where MBS Highway’s Buy vs Rent tool and the Morning Update can help.

For example, in the Morning Update we talk about rental prices. Apartment List released their National Rent Report for November, which showed that rents have increased almost 18% year to date.

To put this in context, rents from January to November averaged just a 2.6% rise in the pre-pandemic years from 2017-2019. This rise in rents can have a significant impact on your clients’ cash flow over time.

Buy vs Rent

But if your clients were to purchase a home their mortgage would amortize, building wealth and equity. Plus, with a fixed rate loan their monthly payment would remain relatively stable into the future.

Another great feature of MBS Highway’s Buy vs Rent tool is we give you the annual rent increases for specific counties or zip codes. Let’s take for example a $400,000 home in Hillsborough County, Florida.

 

Buy vs Rent

Based on the cost per square footage for both renting and purchasing in this county, a comparable monthly rent on that home would be around $2,500 per month. Let's say the client is getting a discount at $2,100 per month. We know that rents are rising 5.5% annually in this particular county.

 

 

Buy vs Rent

Now, let’s say your clients were to purchase a home with a fixed rate of 3.25%, putting 10% down and they are thinking about living in this home for nine years.

Now that you have all this information, can you tell me what option is better and by how much?

Buy vs Rent

 

If not, no fear. MBS Highway is here!

With our Buy vs Rent tool, you can show your clients that just on a cashflow basis they would be better off purchasing by $29,000 and that is just the beginning. They could expect to gain $208,000 through appreciation alone!

And then there is the best kept secret: equity though amortization. Make sure your clients know that part of that monthly mortgage payment is principal and interest and while some of that goes back to the lender, the other portion is basically a forced savings plan taking money from one pocket and putting it in another. Overall, they might be surprised to know they would be $267,000 better off purchasing over renting. 

More Market Volatility Ahead?

We talked about a new year bringing a new market, and it appears we need to strap in for more volatility and a rise in rates. The MBA came out with their forecast for 2022, which stated that they see rates going to 4% and refinance volume dropping 62%. So how are you going to keep your refinance business in a higher rate environment?

Of course, clients don’t just refinance to get a lower rate. They may need cash for unexpected expenses or emergencies. The first step to keeping your refinance business thriving is realizing you have the power to help change people’s lives during difficult times. Not just that, but the strong appreciation we’ve experienced has created a wonderful time for cash-out refinances.

Rising Rate Market

Let’s say your clients bought a home three years ago for $500,000, with their original loan for $400,000 at a rate of 3%. What if they need to refinance, but the rate is 4% and the closing costs would be $4,000?

At first glance, it would not make sense for your clients to refinance. Their current principal and interest payment is $1,686 and their proposed principal and interest payment would be $1,802.

 

Here's the Problem

However, since they purchased their home, they have been building equity and we can use that equity to help them financially.

Let’s say in this scenario your clients are hoping to pay off credit card debt. You can show your clients how they can use the equity to pay off this debt, which would save them $1,776 per month.

 

 

Be a Debt Manager

Now let’s say your clients are beginning to get excited but they stop you and say, “This is great but I’ve been paying down this 30-year mortgage and I don’t know how I feel about another 30-year commitment.”

This is when you can show your clients the power of debt consolidation. Advise your clients that instead of pocketing the extra money they are saving, they can instead invest that $1,776 back into their mortgage.

 

Debt Consolidation

Nothing is going to change. They are going to keep making the same monthly payments they have been. But since they are putting that money back into their mortgage, they won’t have 30 years left of payments. Instead, they would have 11 years and 11 months. And since they are paying that mortgage off sooner, they are able to amortize much more. 

The bottom line is this. To keep your refinance volume in a rising rate environment, it’s crucial to be able to articulate the financial opportunity and be a debt manager.

Making a Real Difference With Social Media

Lastly, if you want to really make an impact in your business next year, it is important to amplify your message. By mastering social media and social video, you can have a greater reach answering common questions and concerns, building your reputation as an expert and advisor in the process.

MBS Highway’s Social Studio tool is here to help. We create scripts bi-weekly on engaging topics like “Making the Right Choice Between Buying and Renting” and “Understanding the Latest Data on Home Appreciation.” You can even create your own scripts. I have seen originators multiply their business four times over in a few years simply by adding social video marketing to their communication strategy.

Want access to the tools that can give you the confidence and knowledge to thrive next year? Sign up for a free 14-day trial of MBS Highway and see for yourself the kind of impact they will make.