Mortgage loan comparison calculators can be used for far more than just comparing loans with different interest rates. Comparing and contrasting different program types based on eligibility, the lowest fees, total cost, the lowest monthly payment or the fastest balance reduction is possible and worthy of consideration.
The benefits of comparing loan options side by side to allow borrowers to see the differences that exist is extremely beneficial. Too many prospective borrowers fail to look beyond interest rates or annual percentage rates to try to discover what’s best.
Yet there are so many various needs: the desire for fixed rates vs. adjustable; the need to accommodate a challenged credit score; maximum loan amounts; total interest costs; or the requirement to balance mortgage loan payments with student loans or credit card debt.
Keeping mortgage payments low to accommodate needed home repairs or improvement can be a big factor too. Of course, conventional vs. government loans or a conforming and simultaneous second vs. a jumbo loan is an important thing to compare as well. The list can go on and on, for there are always new and different scenarios to compare.
The ability to compare loans in a truly analytical fashion is not something that most borrowers come armed to do. It behooves loan officers to have tools such as loan comparison calculators available and to share them and the results that come from them in as transparent a fashion as possible.
Ideally, instructing a prospect as to their loan options available after basic qualification and credit score reporting can help to educate borrowers on the differences that exist in the many possible loan options extending far beyond the age-old question of “what’s the best rate?”
Some borrowers are low on cash but high on income. Some mortgage prospects will swear they want a shorter-term loan yet haven’t done anything to start saving for retirement or for their children’s college education.
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Minimizing mortgage loan payments so savings can be maximized is a wealth-building strategy that can make great sense for many, especially when mortgage loan rates are still hovering near all-time lows. The cost of borrowing can be greatly eclipsed by the benefit of re-directing savings not into their home’s equity via balance reduction, but rather, by saving or investing those same funds to build liquid reserves and long-term tax-advantaged retirement savings.
Many borrowers are surprised to see that a higher rate loan with lower upfront costs can cost them less over the time they expect to have that loan vs. the absolute lowest rate loan available. We all know the lowest rate loan option happens to also come with the highest cost. It can take 5-6 years or more to earn back the money paid as points to secure a lower rate, and thus, if the homeowners then sell or refinance prior to that, they’ve now lost money. That’s certainly not the intended result of securing the lowest rate mortgage loan.
It’s unfortunate that as an industry, we’re forced to use APR or annual percentage rates when in fact, those only inform borrowers of the total cost of their loan if they have it for the full term. How often does that actually happen? Just look at the last few decades where interest rates have fallen pretty steadily from the stratospheric high teens of the 70s to the 2s much more recently. There wasn’t often a period in those years where paying a premium for a lower rate proved worthwhile when one could later refinance to a much lower rate instead.
Using the right loan comparison calculators can illustrate to borrowers or prospects that over time, the market itself will usually add far more equity to a home than the repayment of principal. This argues well toward taking a longer-term loan and being smart with the savings.
With so many parents banking on things like high school sports achievements leading to reductions in the cost of higher education via scholarships, it’s a far better, safer and easier plan to show how taking a 30-year loan instead of a 15-year loan and plowing the savings into a qualified education savings account can both accumulate funds more quickly and be far more assured than stellar athletic ability leading to a free ride to college.
There are many more examples of educating borrowers and helping them to identify and utilize the loan best suited to their needs and desires in the Surefire CRM system. It may be unusual to expect to find this type of utility in a CRM, yet that’s just the beginning. Why not schedule a demo today and see what else Surefire can do for you and your business?