Anthony Marinaccio, Senior Vice President of Mortgage Lending at Guaranteed Rate, joined Keith Black, Managing Director at RIA Channel, to discuss the choice of homebuyers to pay cash relative to financing with a mortgage.
Guaranteed Rate is the largest non-bank mortgage lender in the US. Marinaccio notes that many homebuyers may choose to liquidate investments to pay cash for a home. Using cash to purchase a home has an opportunity cost, as keeping those funds in stocks or other investments could potentially earn a return higher than the cost of mortgage financing. Investors who keep their money in the markets also keep those assets with their advisors. Investors may elect for a cash-out refinancing of their current properties, with the proceeds used to reinvest in other real estate properties or the equity markets.
Guaranteed Rate is one of the participating lenders on the Advisor Credit Exchange, which is a technology platform that advisors can use to facilitate the comparison of options for mortgage lending, cash management, and securities-backed lending. The platform offers live rates from various lenders, with quotes easily refreshed to reflect changes in market rates.
Advisors must be aware of the Real Estate Settlement Procedures Act (RESPA), which requires disclosures on mortgage terms and loan fees. By shopping loans across at least four lenders, clients are given better choices and disclosure, which allows advisors to reduce their risk under RESPA.
Resources: