How Do You Simplify Complex Mortgage Terms for Your Clients?
We asked mortgage brokers and principal brokers to share their best techniques for simplifying complex mortgage terms for clients. From explaining in simple language to using visual content, here are four effective strategies to enhance client understanding.
- Explain in Simple Language
- Provide Multiple Examples
- Relate to Everyday Concepts
- Use Visual Content
Explain in Simple Language
One technique I use to simplify complex mortgage terms for clients is by breaking down industry-specific terms into everyday language. For example, instead of using terms like "amortization schedule," I explain it as a "payment plan" that shows how much of each payment goes toward the loan and interest.
This approach is effective because it helps clients understand the key concepts without feeling overwhelmed, making it easier for them to make informed decisions. Clear communication builds trust and ensures they feel confident throughout the mortgage process. We are also in the process of having a new website made, and on this, we are having a page made called "Understanding Equity-Release Jargon: Key Terms Explained."
Provide Multiple Examples
There is a fine line between simplifying complex mortgage terms for clients and staying within the context of their impact and meaning. The most common and effective way I use is by giving examples that help clarify, and sometimes, it may take a few examples or saying it differently for a client. Because our brains all work differently, how I describe something to one client may not make sense to another, so I have to be aware and sensitive to this in conversations.
All of the other mortgage terms should be considered when deciding which bank or lender to work with, as the rate is not everything, and one of the other terms could prevent you from a refinance or cost you thousands in payout penalties. There are many different terms to a mortgage, and when borrowers go and sign the final, full mortgage documents with their lawyer, it can be overwhelming with the legalese used.
Even with our explanation of terms, clients are encouraged to read and ask the lawyer further questions on the final mortgage documents. There are times when we get messages from clients who are in the process of signing with their lawyer and need further clarification.
Relate to Everyday Concepts
One technique I use to simplify complex mortgage terms for my clients is to relate them to everyday concepts they already understand. For example, I often explain "amortization" by comparing it to a car loan—how the loan is paid off over time in regular payments. I break down "interest rates" by likening them to a rental fee for borrowing money, just like paying rent for an apartment. This method is effective because clients can easily grasp familiar ideas, which helps reduce confusion and builds their confidence in making informed decisions about their mortgage.
Use Visual Content
As a real estate copywriter, I work with mortgage brokers. And yes, this is a common issue. Most people cannot differentiate between similar loan products. It's difficult to guide people about varying terms and credit-score requirements. On top of that, many websites provide faulty or insufficient information. And sometimes the practical world is different. For instance, you can qualify for an FHA mortgage with scores starting from 500, but that's not a practical approach. Ideally, your credit score should exceed 600.
Here are the most effective tools to handle this issue:
- Real estate infographic
- Instagram/Facebook shorts with sample calculations
- Short YouTube videos explaining how a mortgage product works for the consumer
If you have these three tools in your kit, you can just forward them to your client. The client will spend a couple of minutes watching the content, and that will help them make the right decision. It's a time-saving approach and simplifies the complex language.
