Tompkins real estate + mortgage means I do real estate plus mortgage! Ha! I knew you already knew that. But do you know where the power and magic lies in that!?? That magic is the real aha moment of that little + sign.
When I can work with my buyers on the mortgage side, the magic really happens. I recently closed two transactions where I was able to represent my buyers on both ends. The result was: 1. first time homebuyer was able to buy a home he otherwise wouldn't have been able to afford. The extra buying power I was able to provide allowed him to buy a home that worked for him and allows him to have two roommates making the mortgage work! 2. A young family looking for a place to grow into was hard with current interest rates but with the extra bump in price point due to my dual license, they found a home that fits the family today and their family for years to come.
So what are the real numbers?
The magic is actually just simple math. But simple math can be magic! When I represent my buyers I have the option to do their mortgage with a custom compensation plan. As a result, their mortgage rate is as if there is NO commission. This can lower the interest rate by as much as 1% in some cases. With the average home in Fort Collins pushing $700,000, this 1% means real dollars for a real long time. For instance, with a $500,000 mortgage, this 1% can save the buyer $333 every single month! This is nearly $4,000 every year for the life of the loan. If you look at the impact on debt to income given this it is awesome! In this same example, the P&I payment with the discount is $3,100 vs. $3,425 (round numbers). I am increasing their buying power by $50,000! with their same debt to income ratio.
So how does this "custom compensation plan" work? That's a great question! It's a case by case basis- but generically, I take the difference in payment and multiply it by 20. That's the commission. This works because it makes the lower rate a very powerful interest rate buydown. Usually an interest rate buydown like this would cost thousands more than just 20 months recapture of the savings. I can arrange with each buyer how they pay this commission. We can do payment plans, upfront, or the best yet.......through your listing commission.
That's right, there's MORE! If I also list your house we can make this compounding even better for you. If I'm making commission on the purchase, the sale, and the listing, we will sit down and put it all together in a way that is very attractive for both parties. The principal here, ultimately, is that the mortgage commission is paid by the listing commission so there is no money out of pocket for a great interest rate!
Not only is buying power an advantage, but not having to refinance for a long time is also a very powerful benefit of the dual license. In fact, I believe this benefit is massively underrated. Refinancing is great and everyone that can refinance and save money in a monthly payment should consider it and weigh all options. But, there are challenges and downsides to refinancing.
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1. Sometimes folks go through stages in their careers and lives where they don't qualify for the mortgage they currently have and thus can't refi. If you move from salary to commission, if you start your own business, if you lose your income or your job, you may not qualify for a refi when you want to.
2. Sometimes folks are planning to decrease their income due to retirement or other transitional reasons and getting into a low rate now can help them for years to come.
3. We all know refinances cost something! There is no FREE redo. So pushing that refi out as far as possible only allows you save money and put more and more toward principal as soon as possible.
4. Of course the other dirty secret of refis is starting the 30 year clock over again. Now, of course, you don't have to get a new 30 year mortgage and start over but many folks do for good reason. As a result, again, it is best to push that as far out as possible.
I have two happy buyers that were able to close in June and realize massive savings for years to come. The first buyer may eventually rent the entire townhome out and have a below market owner occupied rate in a true rental home! How awesome is that? That gift that absolutely keeps on giving. If you would like to see some real numbers for your situation. Please don't hesitate to call. I'm kind of a spreadsheet junkie, and I could use a hit right about now!
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