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Mar 10, 2021

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By Dave Savage, CEO, Mortgage Coach


Home appreciation rates have increased significantly over the recent months. According to the Federal Reserve, consumer debt has skyrocketed to $979.6 billion – and thanks to the COVID-19 pandemic, many people have adopted the mindset of: “I need to lower my payments to their absolute lowest so that I can weather any storm.” People are also thinking, “I might want to take some cash out and improve my liquidity.”

This provides Loan Officers with a tremendous opportunity, not just to be mortgage advisers, but to be debt consolidation advisers. I recently spoke with Brian Jensen about how he’s giving advice on debt consolidation. Brian is a brand new Loan Officer, and in just three months, he’s already able to deliver something that most 10-year veterans can’t.

“You’ve got financial advisers, insurance agents, and even Loan Officers out there who get paid to sell products, but there’s no real adviser for debt strategy,” Brian explained, when asked about why he offers debt advisory services. “I think being a debt adviser allows us to fill an industry gap on how borrowers can leverage their debt correctly. And seeing how big of an impact that can make on a family is really motivating me to become that adviser. When you free up that cash flow from debt and redirect it to principal reduction, it will blow their minds with what those numbers can do.”

Tip No. 1: To be a debt consolidation adviser, give your clients a financial makeover by asking questions such as:

  • “What are your goals, dreams, and plans?”
  • “What do you think appreciation rates are going to be?”
  • “What non-tax-deductible debt do you have – car loans, credit cards, or student loans?”
  • “How is your current home working out for you?”
  • “Do you have any plans to improve the home you’re in?”

Tip No. 2: Use statistics (including consumer debt, mortgages, and equity) to support your case; but in addition to national statistics, include state and local market statistics, as well. Use that information to personalize your advice to your client. .

“Consumer debt stats are going to show they’re at an all-time high, but you also have the psychological effect of COVID just hitting,” Brian notes. “And I think a lot of people are starting to say, ‘Wow, I don’t have the liquid reserves I should have. I'm carrying way too much debt.’ Even if they’ve survived and had their job through COVID, they’re now realizing that the world can change on a dime. I think there’s a real psychological factor here.”

With equity skyrocketing because of COVID, combined with the benefits of debt consolidation and helping families reach their freedom point sooner (by paying off their loans), Brian realized that families are going to have a lot of excess liquidity, and he felt he should learn how to advise customers on what to do with that equity or they might not spend it wisely. “If they’re smart, they’ll reinvest it. So going forward, I’m going to start putting together a reinvestment strategy at that freedom point for the new amount that was their payment, to show the net worth gain over 30 years. I think that will really blow their minds.”

Even if you have an assistant creating your documents for you, “you’ve got to know the right questions to ask and be able to tweak your presentation and strategy on the fly as you learn more about their wants and needs to advise clients on the right strategy,” Brian says.

QUESTION: “Why would somebody pay a higher vs. a lower interest rate?”

“The Mortgage Coach Debt Consolidation Total Cost Analysis (TCA) shows you why a higher rate is not necessarily the best strategy,” Brian says. “If we can do this debt consolidation, free up cash flow, and use that cash flow to pay down principal, the best strategy could very well be a higher rate. The power of the TCA is it takes complicated numbers and lays them out in a way that someone who’s not used to mortgages at all will get it. And so I think this layout is perfect for that.”

This kind of service is a financial-tech innovation. The financial planning industry doesn’t have anything like this. The CPA industry doesn’t have anything like this. This is an innovation, and it helps families make an informed, clear decision when considering non-tax-deductible debt vs. mortgage debt.

The Bottom Line

Advising about debt consolidation helps unlock wealth for families. Also, paying off debt will help improve their credit scores. And if they refinance in six months, their scores will have improved and their rates and terms will be even more impactful.

“I struggled from paralysis analysis, and I didn’t have as much confidence in the residential space as I was used to having in the commercial space – so it held me back. Being able to offer debt consolidation really sets me apart and makes me an expert. It gives me that confidence to get out there and make things happen, because now I truly am an expert, and seasoned veterans can’t do what I can do.”

Want to learn more about Dave Savage and Mortgage Coach? Visit the website here.

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