Handling Objections About the Pay Option Arm.

Nowadays, there are hundreds of Loan Officers and Mortgage people who have the Pay Option Arm at their disposal, but there are very few that actually know and understand how to sell it, the right way.

I’m sure there are all kinds of people reading this right now saying “I know the right way to sell it, bla-bla-bla.”  If you do, great!  I give you props for doing so.  BUT, there are a lot of Loan Officers that don’t know and don’t know they don’t know.  Get it?   I’m hoping this little article will help shed some light on what I’m talking about.   Here’s what I mean;   if you can handle the objections, you can sell the Option Arm.  If you understand the objections, you can answer them properly.  I’ll give you a brief “this is what I’m talking about” here. 

Almost every objection you get when presenting the POA properly will be a version of one of these:

1. I’m afraid of the rate increasing too quickly and going too high.
2. I’m afraid my payments will increase and I can’t afford them anymore.

There may be other minor ones, but let’s tackle these.

“I’m afraid of the rate increasing too quickly and going too high.”

This one is simply overcome by explaining the indexes to the borrower, in a way he/she can understand!  That’s the key, keeping it simple.  Don’t overwhelm the borrower with fancy mortgage terms, just stay with the basics.   The index is the only “moving part” of the POA.   So, making the borrower feel comfortable with the index is the key to overcoming this objection.

NOTE: Which ever index you decide to sell, make sure you can explain it to the average person who doesn’t understand the first thing about mortgages.   I always ask myself, did you explain it in a way your Grandmother would understand it?

You may be able to explain some indexes better than others, but you have to figure that out on your own.   

*Tip:  Have your Account Rep explain it to you until you fully understand it*

Once you’re borrower is comfortable with how stable, or unstable, the index actually is, you’re ready for the next objection:

“I’m afraid my payments will increase and I can’t afford them anymore.”

Now this is the time to earn your money.   You have to really understand how the payment is figured and how the increases are figured.  Not just by using your calculator, but by explaining it to your borrower as well.    

Don’t always assume the payments are in 5 year increments.   There are a few Lenders that actually have a 10 year recast, so know who they are and what their parameters are.

Here’s a tip, the simpler you can make it for your borrower, the more of an “expert” you’ll become in their eyes.

Just a couple of quick tips about the Pay Option Arm.

Go out there and sell!