Refis, Refis: How to Handle Them in a Fluxuating Market David M. Devlinrefis, market, finance The refi boom is still going strong. We saw rates dive in mid-November, only to watch them shoot back up again in early December, and many borrowers are scurrying to close their loans as fast as possible. The economy is showing no signs of immediate recovery, holiday retail sales are lower than in recent years, and the Federal Reserve continues at hint at further interest rate cuts. Experienced brokers have seen markets like this before, and know how fast they can dry up. So what wisdom can the veterans impart upon our less-experienced associates? ++Be Realistic About Timeframes--Don't tell clients that you can deliver in two weeks, when it is not possible; you will only end up with unhappy customers. With appraisals taking anywhere from two-and-a-half to four weeks and underwriting lasting between seven and 10 days, tell your borrower that the process may take up to 60 days. It will alleviate some of your pressure, and provide your client with a sense of confidence, when you deliver the loan in a realistic timeframe. ++Gain A Financial Commitment--Ask your client to pay for appraisal and credit report fees at the application phase. You are going to invest your time in working on the client's loan request, but have no guarantee that you will ever be paid. In this kind of market, borrowers have more of a tendency to double-app brokers. In the past I have made the mistake of forgoing the financial commitment at the beginning of the loan process, and have consequently absorbed my fair share of appraisal, credit report, and condo certification fees. ++Do Not Hold Out For The Last 1/8 Percent--Many borrowers will ask you to predict the bottom of the market. At the beginning of the loan process, consult with the client about a target rate and price, but explain that no one can possibly know where the bottom will actually end up. Gain a commitment to lock, and close when the market is either at the target or within a range that will be acceptable to the client. Don't be greedy and hold out for that extra fraction. That's when your extra profit can turn sour, as you are forced to honor your rate lock commitment. ++Honor Your Loan Delivery Commitment--Remember, your lender took the risk of increasing rates when you were given a rate lock commitment, and we all know that a loan cannot be delivered after cancellation or double app-ing. When brokers lock several sources with no intention of delivering a loan, both the lender and the reputation of the broker community are damaged. ++Utilize Past Clients--As your phone rings with opportunities to create new lifelong clients, don't forget that your best referral source is a satisfied client base. I have sometimes made the mistake of putting new clients before my existing refinancing customers, only to later find out that they went to another broker. Remember: people will only remain loyal for as long they're interested. ++Stay Relationship Oriented--Each client can be worth thousands of dollars in income from referrals and refinancing. Get your client the best loan for them, not the loan that will give you the highest immediate return. Turn each opportunity into a lifelong commitment.