TOTAL COST SELLING: Creating Instant Credibility and Clients for Life

I’ve talked a lot about being a trusted advisor and that the best way to become a high-value trusted advisor is to provide clear, transparent options that show the total cost of a mortgage over the life of the loan.

But I often get questions from loan officers who understand the concept but aren’t sure what to say and don’t feel confident in their language. So the purpose of this article is to help you solidify the scripting you are using to be a “Total Cost” mortgage advisor. While the article isn’t exactly a quick read, I promise if you implement this strategy and scripting, you will close more loans every single month. So I ask you...how much do you make in commission per loan? Reading this article and implementing the Total Cost Selling script will create at least one extra loan monthly for you.

Having your scripting right is critical to your ability to improve your conversion, close loans faster and generate more referrals. It also will help protect your business from rate shopping and rate changes.

I also want to add that once you have mastered your scripting, it should be the same whether you are in a face-to-face meeting, talking over the phone, writing an email or recording yourself on a video to send to a client. When you develop a script that works, you stick with it – every time, for every client. Just listen to my interviews with Jeremy Forcier, Josh Mettle, Wally Elibiary and Danny Horanyi to hear their scripts and listen to how they have mastered them and consistently use them with every client.

Wally Elibiary always starts conversations with. “My commitment to you is to help you make informed choices about your financing options when buying a home. There are many different ways to finance a home, but to find the best option, we must take into consideration your long and short-term financial and investment goals, as well as your payment principal equity, tax, and cash flow objectives. I’m going to ask you a few questions to help me get a better understanding of your goals with your home purchase, then help to determine your current purchasing power and recommend several different strategies that will enable you to achieve those goals.”

Josh Mettle always says “My Total Cost Analysis is going to make the decision-making process ridiculously simple for you.”

Here’s an example of a long form borrower consultation script

In your introductory meeting, there are 3 key points that should be covered in your scripting:

• Explain your client’s total cost over time
• Explain how they can be debt-free faster
• Explain the power and freedom that comes with a pre-paid mortgage or investing to accelerate financial their freedom.

These are easy steps that will deliver obvious, tangible value to your clients. By helping people make more informed, intelligent decisions, you gain their trust. A solid scripting process will help you develop instant credibility at the point of sale both over the phone and in-person. And Total Cost Selling is the key to creating that instant credibility and maximizing referrals.

How is this different than typical rate selling? Here’s a scenario with a customer calling a loan officer. We’ll call her Jennifer Ruiz from Make-A-Difference Mortgage. This is what an introductory script would sound like.

Jennifer: “Hello, Make-A-Difference Mortgage. This is Jennifer Ruiz speaking. How can I help you?”

Dan: “Hi Jennifer. My name is Dan. I’m just calling to check out what your rates are today.”

J: “Okay Dan. I would love to tell you exactly what our rates are. However, before I can really quote something for your situation, I need to find out a little bit more about what it is you’re looking for. Is this a purchase or a refinance?”

D: “Purchase.”

J: “Okay. So you’re buying a new house?”

D: “Yes.”

J: “Good for you! I just need to find out a little bit more so I can quote you a rate that matches perfectly with the type of loan you’re looking for. What is the purchase price for the property you are trying to buy?” (Note: you could use Wally's script here if you feel you need to say more to open the conversation.)

D: “It will be around $250,000-$300,000 and it will depend on how much I can afford.”

J: “And that probably depends on the down payment and the monthly payment and stuff like that.”

D: “Yes.”

J: “And how much did you plan on putting down?”

D: “Well I’m not sure. I don’t have a lot to put down right now, but I am thinking between 0 and 5 percent.”

(Note: This next question is the first step to positioning yourself as a Trusted Advisor, because it is a question that other loan officers don’t ask, so you immediately create a GAP between yourself and other loan officers with this single question.)

J: “How old would you like to be when your home is paid off?”

D: “I would like to be about 50-55.”

J: “And if you go with a 30-year mortgage, how old are you going to be?”

D: “I will be about 71.”

J: “Okay, based on that it looks like you are going to be 21 to 26 years beyond the dream of having your home paid off.”

D: “Yes.”

J: “I ask that question because, contrary to popular belief, you don’t have to choose either a 30 or a 15-year loan. What you can do is pick a loan that is best for your situation. You can get a loan that gives you the lowest monthly payment possible so you can have the flexibility to make a little extra payment or invest the difference between one payment and another. A small change in one debt structure vs. another can make a life-changing difference.”

( Note: Some clients won’t let you go through these many questions. Many times you need to gauge their tone and how interested they are about what you’re discussing. Sometimes I will give them a rate quote that ranges from the high to the low end. I typically say to them, “As soon as I have a little more information, I will tell you exactly what your quote will be.”)

J: “How long do you think you want to be in this home?”

D: “That is a good question, but I probably won’t be there until I pay it off, let’s put it that way. Probably 7 years. Tops.”

J: “Dave, it’s important to know that if you talk to other lenders to compare rates make sure you compare the Total Cost of the loan over time – because, the single most critical element of your mortgage is the Total Cost of your loan over 7 years.”

“I’ve been running some numbers while we’ve been talking and based on a $300,000 house, today’s rates for the type of program you are referring to is 4.5%, and over 7 years that will make your total payments, with interest, points and everything else $127,685. I have a special software program that most loan officers don’t have access to that helps me calculate Total Cost and other critical numbers to help you achieve your financial goals faster and with more clarity.”

“Again, I want to make sure you understand why this is such a big number; this is your Total Cost over 7 years. Most lenders don’t give you these numbers, but I feel that my role is to make sure you make a fully informed, educated decision. I will always recommend the loan that gives you the lowest cost over time so that you can invest your monthly savings either back in your mortgage or in some type of asset accumulation account. Another thing to think about is, even though you may be in your home for seven years, it isn’t likely you will be in the loan for that period of time, because interest rates fluctuate. I have many clients that have refinanced their homes over three times in a seven year period, but it is still important to know the cost over time.”

“Now, I just want to make sure we are on the same page. Do you understand the importance of knowing the Total Cost over time?”

D: “Yes, Jennifer, this is great information—I am surprised other loan officers haven’t mentioned this before.”

J: “And another point I want to remind you of is rates do fluctuate, not only day-by-day, but also they can sometimes change during the middle of the day. The interest rate I am quoting today for this particular program might not be the same thing tomorrow.”

“Now I would like to discuss some options that may help you pay off your home by age 50. Would you like to know a few of the options available to you?”

D: “Yes, definitely.”

J: “Most people that I talk to don’t realize that just by making an extra $200 payment every month, your house would actually be paid off X number of years sooner, or if you invest that $200 in an asset accumulation account at 5% you could make enough to pay off your home by your target age of 50 or maybe sooner. Our special software not only helps us calculate the total cost over time, but it also shows the power of an extra $200. Have any other loan officers mentioned these numbers before?”

D: “No, I wish.”

How to determine how much they should invest

The number you give them, whether it is $100 or $200 or $500, will depend on how payment sensitive you think this client is. If you can tell that this is a person buying their first home and barely getting into it, you might say $50 to $150. If this is someone who is putting 20% down or more on a $400,000+ house, you may want to go straight to $200-$500 or even more so you can present them with the possibility of a serious life-changing impact. This is a key point: Trusted advisors don’t sell loans or interest rates like most loan officers – they give life-changing advice that, if followed, can help the client retire years before they thought possible.

Depending on how the rapport is going, if you are hitting it off and they are really interested, then you should help them to imagine having their house paid off at age 53 versus 65. However, too much information is just as dangerous as too little information, so you need to be reading the client, asking good questions and listening to their answers so you can understand their priorities. For a client who isn’t patient and necessarily interested in anything but the bottom-line lowest interest rate, AKA Mr. Rate Shopper, that guy, simply say, “Look, I ran a bunch of numbers. Let me get your email address because I am going to email you a complete proposal on the program I recommend.”

What to do with a Rate Shopper

If you get someone on the phone who is a rate shopper, you can still compete. You ask: “Now I may not have been the first person you talked to. What interest rates have you been hearing out there?”

You plug the numbers they give you into the Total Cost Analysis and show the caller how your solution makes more sense, or let him or her know that you will match that rate. If you can match that rate and still show the person how to pay off their house years earlier, email the TCA while on the phone or give the person a call back.

I recommend asking for the email address before the phone number mainly because most clients are less resistant to giving an email address than they are to giving a phone number. But once they’ve answered one question, the chances of them answering more increase, the deeper the questions get and the more personal they get. Once you’ve got that email address, it is that much easier to get the phone number. So you are gradually opening the door to a relationship.

I recommend you take this script and try it out on the next person who calls you. Keep the Mortgage Coach Total Cost Analysis application open on your desktop or your mobile device so that as soon as you pick up the phone, you can start plugging in their name, their purchase price – every piece of information you get as you move the conversation forward. Then when you’re ready to start discussing options, the TCA will be fully populated and you can begin your Total Cost Selling script.

If you want to master some of the industry's best scripts, I’ve interviewed many of the nation's top mortgage professionals and recommend you watch videos in our Script Playlist in our YouTube channel. 

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