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Since the market crashed, we’ve been stuck in a world of rate reduction refinances. For a long time, no one had equity and consumers were afraid of the term “Adjustable-Rate Mortgage.” So the only refinancing to be done is lowering interest rates. Now everything is different, home prices are steadily rising with another strong year-over-year jump in home prices. What are we going to do when rates go back up?
The time has come to change our sales approach from only having rates reduction conversations back to the method of finding out a borrower’s situation and then presenting them with as many options as possible. They will choose the one that best suits their needs. This will increase your close ratios and bring you more loans and more income each month.
The highest close ratios come from the mortgage professionals who do not have rate conversations with their borrowers. But rather, the conversations about the borrower’s financial needs and then move to their mortgage, and eventually to what they quality for. Home values are rising, thus allowing borrowers to qualify for lower monthly payments, cash-out refinances, etc. Borrowers have options besides rate reduction now and it’s important to talk to them about all the products they may qualify for. Some people would rather have a short-term loan and have no problem with higher payments to get it. If you were trying to pay off all your debt so you can retire, buy a second home, or put your kids through college, the interest rate doesn’t matter as much because you are paying off the loan early anyway.
Because the only refinance conversation to have has been rate reduction. Loan officers have become accustomed to asking for the rate first and telling the borrowers how much they can save if they lower it. Now that those same loan officers are trying to sell mortgage insurance premium (MIP) removal, they are having a hard time conveying the benefits to the borrowers. The conversations still revolve around interest rates because loan officers are still asking what their current rate is. This is putting rates first in the borrower’s mind.
When you know what is motivating someone to make a major financial change, it’s a lot easier to explain the benefits in terms they will understand.
TagQuest customer spotlight
Each month, we talk with our clients to see how their campaigns are going. Here’s some feedback we received from Zack M.
►What campaign did they use: Direct mail
►What volume they do per month or per drop or per order: Five thousand pieces every two weeks.
►Some kind of measurable result: “Closed loans, response rates, number of applications taken. The more details here the better.”
►Response rate: 0.85 percent, apps about 30 percent of the calls, close 2.5 loans per week from the mail.
►Highlights of the campaign that appeal to your client: “Ease of the process. Everything from ordering to taking calls takes little effort on my part. Even the free tracking helps ease the time tracking down information. It’s been that way for two years now.
►Highlights of the campaign that they feel would appeal to other mortgage lenders: “One stop shop with proven results. Would recommend to anyone.”
Based in Medford, Ore., TagQuest Inc. is a full-service marketing firm developed throughout the ever-changing mortgage industry. Utilizing industry knowledge, marketing expertise, and technology we implement any or all aspects of your marketing and/or advertising campaigns. With a proven track record, more than 10 years in business, and decades of experience TagQuest knows what it takes to produce unprecedented results in today’s fast-paced mortgage environment. For more information, call (888) 717-8980 or visit www.tagquest.com.
This article originally appeared in the December 2015 edition of National Mortgage Professional Magazine.