Some Good (Old) Advice
As a parent, one of your ongoing goals is to impart day-to-day guidance and deep wisdom to your kids like “look both ways before you cross the street” and “don’t eat yellow snow”. While YOU know how insightful these little nuggets are, they don’t always listen to you, but when someone other than yourself shares the same advice, they’re viewed as geniuses who could kick Stephen Hawking’s tail on Jeopardy.
As a real estate agent, when you’re dealing with someone who is currently renting, you quite often feel the same way: why won’t they listen to me? I feel your pain, and I have something you can share with your “children” that comes from a “genius” other than yourself. This information comes from Lawrence Yun, chief economist for the National Association of Realtors, and The Fed. If you think it would work, tell them you got it from this really cool cat named Larry and his Uncle Sam. Regardless of how you spin it, here’s the low down:
• In 2016, the predicted net worth for a typical home owner is $225,000; for a renter, it’s $5,000
• That means a home owner’s net worth is 45 times more than a renter’s
“Larry” sums it up by writing in Forbes.com, “The simplest math shouldn’t be overlooked. A vast majority of home buyers take out a 30-year fixed-rate loan to make a home purchase. After 30 years, there is no loan payment (nor rent payment). So the home price growth over that time period would be the equity that the home buyer would have accumulated.”
I know there’s nothing new (or even that “insightful”) in that piece of wisdom, but sometimes people need a gentle reminder – and having it come from someone other than yourself might elevate it to “genius” status. Sometimes it’s a thankless job. : )
Big Bank Brush-Off
As you may have already heard, the Big Banks like BB&T, Bank of America, Chase, and Wells Fargo have drastically decreased the number of FHA loans that they are originating. As an example, one of the Big Boys originated 19,111 FHA loans in the second quarter of 2013; in the second quarter of 2015, they did only 340. So why bring this up?
The Big Banks have the biggest voices and biggest megaphones: their message will be heard and broadcast through national media. Even the casual home buyer is bound to hear snippets – and what they’ll most likely hear is that FHA loans are no longer available. That piece of incomplete information could stop them cold in their tracks or completely derail them in their design to look for and buy a home.
There are many great things about Big Banks, but loan option variety is not one of them. Educate your clients and empower them with the knowledge that we have what they need – whether it’s an FHA loan or another product that will get them the home they want.