Success is determined for most Mortgage Brokers by one ability: Communication

One’s success at most anything in life is directly related to their ability to communicate clearly and effectively.

When a client calls and asks, as they do, ‘what’s your best rate?’ we learn that to answer with a number only is to lose. None of us actually has ‘the best rate’. Not exactly.

We learn to effectively communicate that there’s many important variables in a mortgage beyond rate, for instance the importance of clearly understanding early exit’s, on-time exits, late exits, and the importance of understanding how penalties work in each of those exit scenarios.

Essentially the rate question is itself somewhat complicated given the nuances of insured, insurable, conventional, transfers, purchases, etc.

Increasingly the opening question is ‘how much can I qualify for‘, also challenging to answer given the wide variety of lenders, rate increments, and programs to suit a wide variety of client circumstances. Not to mention the difficulty in getting to the point where you’ve got ALL the docs and a full picture of the clients circumstances.

A critical time saver, and ultimately a file saver, is knowing what information to communicate and also when to communicate it. Let’s consider three basic phases of client communication:

1. The opening call

A brief, max 15-20 minute chat.

The 40,000-foot view – with basic shorthand applied.

IE ‘payments are ~$400.00 per month per $100,000 borrowed (ranging as at Feb, 2022 by about $40.00 either way depending on product and amortization). This (A-lender) shortcut eliminates requests to solve multiple payment scenarios. ‘If you want to spend an extra $10,000 you know your payment will go up by ~$40.00 per month’. Nice and easy to figure out payments on the spot. However no specifics are offered on what this client will specifically qualify for, or at what rate – none of which is possible without key documents.

Establish trust, establish yourself as the expert, and ideally progress to phase two

2. The documents/bureau review

KEY POINT; DO NOT pull a clients credit even just one second prior to actually having a signed letter of engagement in hand.

Key documents. The 5,000-foot view – time to get serious.

Nothing happens without a signed ‘letter of engagement’ – a serious document, three pages worth of legalese designed to cover your butt. Not the flimsy two paragraphs from 2008, or 1988, so many Brokerages use. A real doc!

Be better!

Once you’ve income, down payment, and a credit report docs in hand it’s time for a deeper conversation on products, lender types, and of course the fixed vs. variable topic can be had. Not before.

It’s important to set aside our own bias and explain that for a variable-rate mortgage the Bank of Canada dictates the Prime lending rate and that there are eight set dates each year where the rate may change, and that it’s unlikely to move by more than 0.25% at any one meeting, also that there are lenders with fixed-payment variable-rate mortgages which insulate borrowers from ‘payment shock’.

Don’t live in the same world of artificial media-induced fear of rate hikes.

Be better!

Apply math, such as the fact that a 0.25% rate hike on a $300.000 mortgage results in ~$40.00 per month payment change. Forty. Not four-hundred-and-forty.

Math is calming.

Again, having all of this data compressed into a dozen or so clearly worded sentences is key. There’s much to be said for the success of the variable rate and the two-year fixed products over the past ten years. Arguably over the past fifty years.

Make sure you know how to communicate this, otherwise you’ll sound no different from the branch rep peddling the flavor of the week – the five-year fixed, a product wrong for 66% of our clients. The losing option.

Be better!

3. Ongoing Exchanges To Completion & Beyond

Into the weeds we go… a completion date is in sight, at least one inside 120 days.

Now we get into the nitty gritty of managing the clients through the final steps. We stay in regular contact to keep them on track and remind them why they’ve chosen the mortgage product and lender that they have (we advise, clients instruct) and which steps will be happening in which order.

We stay in contact with the lawyer’s office, ensuring all lender documents and conditions are met well in advance of the client’s signing, and we let the client know that we are on top of this all the way through.

Key Point; Always review the statement of adjustments before a clients signing appointment.

Conclusion

These are the bite-sized pieces we break our communication into.

Going too deep on the opening call can backfire. Start with the big stuff: payment math, your own availability, connect clients with an expert Realtor, appraiser, law firm, etc.

Cover the high points of the process, letting clients know that as we move closer to requesting an approval, and funding the file, there’ll be increasingly detailed conversations.

The nuances are where you win.

Being able to explain to a client how in many cases a larger down payment actually creates larger risk for the lender is the sort of counter intuitive idea that people do appreciate having explained by an expert.

An articulate expert.

There are many nuances to what we do, mastering the language, and understanding, to explain clearly is critical to your success.

DW