“Mortgage planners”, the next generation of loan officers, teach borrowers how to save for the future by best leveraging their mortgage loan

Palo Alto, CA October 25, 2007—With the proliferation of mortgage loan programs such as Option ARMs (adjustable rate mortgages) and interest-only loans, homebuyers now have access to a previously unmatched number of mortgage programs. How to choose between one loan program and the next? While traditional loan officers generally only help borrowers pick loans with the lowest interest rate or monthly fee, a growing number of mortgage planners is expanding the loan officer’s role to ensure that borrowers’ long-term financial goals are met.

“Most home-buyers as well as loan officers have been conditioned to believe that a mortgage is simply a debt, rather than a useful financial tool,” explains Todd Flesner, a Mortgage Broker with Stern Mortgage Company, a mortgage brokerage company based in Palo Alto, CA. “They think this way simply because that’s the way it’s always been. The problem is, because they’re not seeing the bigger picture—that a mortgage can be used as a vehicle for helping to build financial wealth—borrowers are retiring over $500,000 poorer than they would have, if they’d only given their mortgage terms more thought.”

The mortgage industry is experiencing sweeping changes driven by the growing trend toward mortgage planning, and homebuyers are the primary beneficiaries. Mortgage planning, which involves a loan officer analyzing a borrower’s mortgage options as part of an overall financial plan, is enabling homebuyers across the country to utilize their home equity to better secure their financial futures.

“Conventional wisdom on mortgage loan selection is outdated and misdirected,” explains Flesner. “In many cases, traditional mortgages like 30- and 15-year fixed rate products are considered risky. That’s for many reasons. For example, if someone opts for a 30- or 15-year fixed rate loan, thinking that it’s the best way to build equity in their home, then one day loses their job and can’t pay their mortgage, the bank won’t loan them money to pay off that loan and all of a sudden the home is at risk. Mortgage planning takes this—and many other factors—into consideration. It’s a new way of thinking about a mortgage that makes much more sense than a formula that was created almost 100 years ago.”

“A home is the largest investment that most Americans make in their lifetimes,” explains Steven Marshall, president of Strategic Equity, a Seattle, Washington-based company that provides mortgage planning training to loan originators. “And mortgage planning is designed to treat the home for exactly what it is: an investment.”

Mortgage planning utilizes the concepts that banks and many businesses use to successfully optimize their debt and investing strategies. In essence, with mortgage planning, loan officers can help borrowers better leverage and structure their debt in order to achieve the highest tax benefits, liquidity, safety and get the highest possible return. Reputable Mortgage Planners differ from run-of-the-mill-loan officers in that they’re less focused on interest rates, and more focused on the long-term effects that various mortgage loan programs will have on the borrower’s financial state.

“In the mortgage industry, we’re seeing great response to mortgage planning,” adds Flesner. While we don’t have statistics on what percentage of borrowers are going with Mortgage Planners over standard loan officers, the most successful loan officers embrace the principles of mortgage planning. Borrowers are thriving as a result of this growing trend.”

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