Talking to Mortgage Refinancing Prospects in 2018

February 13, 2018
Mortgage Refinancing Prospects

Mortgage Refinancing ProspectsIt’s easy to tell refi professionals that now is the best time to be talking to mortgage refinance prospects. But what should you say when you talk to these prospects? What are their typical objections? And how does recent news help you make your case?

Here’s my quick guide to talking to your mortgage refinancing prospects in 2018.

How to Get the Conversation Started

Aged refinance leads are folks who have put in a request for a quote because, at the time, they were interested in refinancing. Whether a day has passed or a couple of months, it’s still a fantastic time to refinance and save money on a home loan or tap into equity.

When you speak to refi prospects, you’ll want to get across all the important details, your name, your firm’s name, and the reason for your call, at a minimum. But beyond that, it’s a great idea to share an anecdote, a very brief story from your work about how you were able to help another client save a lot on their loan, get access to their equity, etc. These kinds of stories get your prospect thinking about their own financial goals and dreams. A great mindset for discussing their own mortgage needs.

What Kind of Objections You’ll Hear in 2018

When it comes to sales objections, mortgage refi professionals have heard them all. Still, you might pay special attention to a couple of the old standards, because today’s mortgage environment calls for it.

Let’s start with a lack of urgency. We’ve all had clients who say they’ll think things over. To be sure, refinancing is a big decision. A home loan is often the biggest financial obligation a family ever takes on. However, today’s marketplace is dynamic. While today is likely one of the best opportunities your prospect has to save on their home loan, mortgage rates are ticking up. Failure to act could leave them paying more.

Another common objection is that refinancing is too much of a hassle. All the paperwork can feel like a hassle when it’s not something you worry about every day. However, for the relatively small hassle of getting a few papers for you, mortgage refinance prospects can save big on their home loan. Interest rates are still far below 2011-levels, for now. But that isn’t likely to last much longer. If they put it off until next year, it’s probably going to cost them.

Speaking of interest rates, those are on the upswing now. If your prospect has been paying attention the last couple years, he may even be unsatisfied with the rate you offer him today. Rates bottomed out in 2016, so he is right that what’s available today is a bit higher. However, there have been several Fed interest rate hikes since then, and more are planned for 2018. That makes a sudden return to much lower rates, very, very unlikely.

How Recent News Affects Your Pitch

There’s plenty of current news about real estate, mortgage rates, and the economy to draw on when making your pitch to aged leads. The key, of course, is to help interpret this news for your leads, making your case that now is a good time to refinance. This is particularly true considering the latest headlines.

A key consumer sentiment survey in January climbed to an all-time high. Fannie Mae’s Home Purchase Sentiment Index found that Americans are optimistic about owning a home and about the safety and security of their current employment.

While consumers may be confident, inflation is beginning to factor into economic forecasts. Economic growth could outpace current trends, and for mortgage borrowers, that could mean higher interest rates down the road.

Speaking of higher interest rates, a conversation with your mortgage refinance prospects wouldn’t be complete without a recap of recent Federal Reserve rate hikes. Since 2016, the country’s central bank has repeatedly inched up the federal fund’s target rate, a key interest rate that affects the loan rate your clients can get on a mortgage. While it’s true that rates are still historically low, the Fed foresees three or four more rate hikes this year. And some experts are saying rates could climb even faster.  

Another news item that matters to your prospects: with last December’s tax reform came changes to federal income tax deductions, and some are saying that home equity credit lines and second mortgages are dead. This is very much not the case, though some changes have taken place. For your clients looking to tap into their home equity, this is still very much something borrowers can deduct on their taxes — provided they use any unlocked funds for “substantial improvements” on their home and that the total of primary and secondary or HELOC loans falls below the new $750,000 limit (it used to be a $1.1 million limit).

Tapping into home equity is a popular reason for borrowers to look at refinancing, and there’s certainly no reason not to do so if the situation is right. Particularly if you’re dealing with a client who’s not sure whether he should refinance or look to sell, this is a good discussion to have. Fixing up a home, with renovations to the kitchen or bath, or with needed appliances or curb appeal, before it’s put on the market, is a smart way to get the most money out of a home sale. The right renovation can pay for itself when it comes time to sell.

Final Thoughts

Now is truly a fantastic time to refinance a home loan. Rates aren’t as low as they were in 2016, but they’re still very, very low. And things are only going to be going up, as far as all the experts can tell us. Refinancing with a low rate today will save your clients in the long run. And HELOCs are still a great way to tap equity, while still getting a tax write-off. Many sales objections may be familiar to you, but take care to frame your response regarding the latest information and forecasts. Talking to prospects is still about building a relationship and getting your lead to trust you. But don’t be afraid to bring up the news. Your aged lead very well may be looking for someone to tell him what to make of the latest scoop.

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