My Pay Option Arm Theory

I’ve recently got this comment:   I just can’t seem to get people to understand the power of the Pay Option Arm loan.  It’s like the borrowers don’t understand the importance of it and how it can benefit them.

This comment kind of confused me at first, more on the theory side rather than the practicality side.  “The borrowers don’t understand the importance of it” was the confusing part.   After I thought about it, I realized something, the borrower doesn’t have to understand the importance of it, the broker/LO has to. 

The more I thought about it concept, the more clear it became to me.  Let me attempt to put my “theory” into words.  You may have to read this twice, so go grab your coffee, maybe get a donut, and let’s get down to business.

I’ve recently got this comment:   I just can’t seem to get people to understand the power of the Pay Option Arm loan.  It’s like the borrowers don’t understand the importance of it and how it can benefit them.

This comment kind of confused me at first, more on the theory side rather than the practicality side.  “The borrowers don’t understand the importance of it” was the confusing part.   After I thought about it, I realized something, the borrower doesn’t have to understand the importance of it, the broker/LO has to. 

The more I thought about it concept, the more clear it became to me.  Let me attempt to put my “theory” into words.  You may have to read this twice, so go grab your coffee, maybe get a donut, and let’s get down to business.

Almost every LO that sells it, approaches the Pay Option Arm loan (or concept) as the part of the mortgage that gives meaning, they emphasize it as the pinnacle of the transaction.  In reality, the most important part is the borrower.  Oh sure, the POA is extremely important, but not so much that the focus is drawn away from the borrower. 

If you can understand this next statement, you’ll be wealthy in this business.   Generally speaking, borrowers don’t know much about this industry, so spewing numbers and figures doesn’t do a lot of good (besides, every other LO does it, so be different). 

So, by you telling the borrower how important the POA is will not always get them to buy.   You need to find out what they need (not what they want)

[by the way, that’s called needs-based-selling].  That’s the most important part of the transaction.  Once borrowers realize what they need, selling the POA is simple. 

If you want to set yourself apart from a majority of the industry, you need to take the emphasis off of you and place it on the borrower.  If the only thing you’re selling is a 30 yr fixed or a 5/1 ARM, you’re doing yourself AND your borrowers a HUGE injustice.  You cannot assume that just because what you feel is a better product, it will be best for your borrower as well.  Besides, if you really sit down and analyze those others programs, you may realize that you’re not helping the borrower at all and you’re keeping the importance of the transaction on yourself and the loan program.  I also realized my last comment may have just turn a lot of people off….if that’s you, that wasn’t my intention.  I’m here to present ideas, I’m here to make you think, and if I’ve made you think about this at all, I’ve done what I set out to do.

Once you understand this theory, selling the Pay Option Arm is simple.  

  In reality, the most important part is the borrower.  Oh sure, the POA is extremely important, but not so much that the focus is drawn away from the borrower. 

If you can understand this next statement, you’ll be wealthy in this business.   Generally speaking, borrowers don’t know much about this industry, so spewing numbers and figures doesn’t do a lot of good (besides, every other LO does it, so be different). 

So, by you telling the borrower how important the POA is will not always get them to buy.   You need to find out what they need (not what they want)

[by the way, that’s called needs-based-selling].  That’s the most important part of the transaction.  Once borrowers realize what they need, selling the POA is simple. 

If you want to set yourself apart from a majority of the industry, you need to take the emphasis off of you and place it on the borrower.  If the only thing you’re selling is a 30 yr fixed or a 5/1 ARM, you’re doing yourself AND your borrowers a HUGE injustice.  You cannot assume that just because what you feel is a better product, it will be best for your borrower as well.  Besides, if you really sit down and analyze those others programs, you may realize that you’re not helping the borrower at all and you’re keeping the importance of the transaction on yourself and the loan program.  I also realized my last comment may have just turn a lot of people off….if that’s you, that wasn’t my intention.  I’m here to present ideas, I’m here to make you think, and if I’ve made you think about this at all, I’ve done what I set out to do.

Once you understand this theory, selling the Pay Option Arm is simple.