If you've already read Who's Selling the Cheapest Money!? then you already have read the most popular way most loan officers squirm out of this objection given by well intending borrowers.
I've included a lengthy "script" of how one industry trainer coaches mortgage originators on how to overcome this hurdle. I know, like, and really respect the trainer, but sharply disagree with his comment referring to "rates can't be much different from one lender to another" as the reality as stands today (July 3rd, 2008) is that's just plain wrong.
For example, today I priced out a loan for a $1.1m purchase in Sunnyvale, CA with 25% down for a $880,000 loan with interest only payments. This is Non-Agency Jumbo land (meaning it's beyond the range of Fannie Mae & Freddie Mac's new max loan amount of $729,500 for High Cost of Living areas) and that money is not cheap to come by for most lenders these days! However, I have a source of a well know savings institution that can fund loans from their own deposits (aka a "portfolio" lender) and not have to package up hundreds of loans and pool them together eventually be sold to Wall Street institutions as MBS (mortgage backed securities - note how this "big" word is referenced in the script below!). The difference in price is downright staggering!
As you can see, for a 7.625% rate, pricing ranges from a rebate of 0.485 points to a cost of 6.625 points! (Note how none of these last four lenders wants to touch anything outside of Fannie and Freddie right now!)
My cheapest lender - 6.000% with a cost of 0.125 discount point!
And they have a really cool float down feature where over the course of your lock period (60 DAYS for purchase! 30 for refinance!) if rates decrease, you'd be able to take advantage of them without having to switch loans or lenders! This lock PROTECTS you against worsening market conditions and FREES you to benefit from improving conditions! It is FREE of charge and valid up until 3 days before signing.
I'd be happy to show it this feature to you in writing on the lender’s rate sheet, and they ARE a company you'd recognize!
Anyhow, enough spilling my sales pitch all over you like that... I just get excited about that feature because when I first ran up against another broker with his rate and audacious claim of this float down feature and found out that it was TRUE... well, let's just say I got real happy!
Now onto that script...
This week's Managing Objections script is to be used when you are prospecting a potential borrower and they respond with "There are better rates on the internet."
The internet may appear to have better rates. But here's the thing, home loan rates are all influenced by the same mortgage backed securities. With that said, rates can't be much different from one lender to another.
If one lender's rate is much lower, chances are very likely you will pay for it somewhere else, like higher fees. And you know the saying, "if it looks too good to be true, it probably is". Maybe more important than even rate right now is the ability to close the transaction. Because of the drastic changes in the lending environment, guidelines change by the minute and you don't have to go far to hear some horror story on a loan and rate that was promised and the lender couldn't make good.
May I ask a tough question...How much risk are you willing to accept with this potential loan? (Listen) Would you be willing to spare a few minutes to see what I can do and find out if even now is a good time to lock in anyway? If after a few minutes, you feel more comfortable working with the internet lender, I will understand and won't bother you further. Is that fair?