Commercial

Tips to Capitalize On a Purchase Mortgage Market

Dec 12, 2018

When interest rates are historically low, there’s an accompanying boom in mortgage refinances. However, when interest rates rise and refinance activity cools, lenders need to be prepared for a market dominated by purchase loans.

To capitalize on current market conditions, a mortgage banker can focus on six key areas to maximize purchase opportunities:

Loan Programs with Low Down Payment Options
Non-QM and Portfolio Loans
Real Estate Partner Relationships
Online Marketing
Contact with Previous Customers
Current Warehouse Lenders

1. Loan Programs with Low Down Payment Options

With inventory down in many markets, especially at the entry-level price range, first-time homebuyers may find it more difficult to find affordable properties.

Offering loan programs with low down payment options and easier credit standards can increase a borrower’s ability to purchase a home.

In addition to FHA and VA loan programs, there are a number of non-government loans that provide options for down payments of less than 20 percent. Fannie Mae offers HomeReady and 97% LTV Options programs. Freddie Mac has similar programs under the name of Home Possible Mortgages with down payments as low as 3 percent to 5 percent.

2. Non-QM and Portfolio Loans

Unlike in the past, today’s non-agency loans are solidly underwritten and required to meet ability-to-repay rules. With industry volume for these products expected to rise dramatically, they are a clear option to capture more purchase business from borrowers seeking Jumbo loans or others that require expanded credit options.

In addition, portfolio loans can allow more of your borrowers to buy homes. They are often an option for borrowers who are self-employed, have credit issues, are non-resident aliens, or have no documented income but do have high net worth. They are also often considered by borrowers looking to purchase unique properties.

3. Real Estate Agent Relationships

For many mortgage bankers, real estate agents are their main source of borrower referrals. Building and maintaining strong working relationships with a number of real estate agents can supply a large number of prospective purchase borrowers. A strong partnership can also improve the borrowers’ overall customer satisfaction and lead to more borrower referrals.

In addition to existing partnerships, look for opportunities to build new relationships, especially if one of your current borrowers is working with a real estate agent new to you. If you become a valued resource on the purchase, it may open the door to future referrals from the real estate agent.

4. Online Marketing

Online marketing is vital in today’s lending industry. Use your website to attract and engage new and existing customers. Flesh out a complete company profile that includes key insights into you, your operation, and what makes you unique. Effective websites provide borrowers with educational information, in addition to rates and products. By sharing mortgage, housing, and financial news, you can become a trusted subject matter expert.

Blog articles can be used to engage and educate consumers if they provide relevant and useful information. They can help you build trust and ultimately grow your email list. Being active on Facebook and Instagram, providing online videos, and sending out a monthly newsletter are other options to consider. Some mortgage bankers host first-time homebuyer seminars or investment property workshops.

No matter what you add to your marketing strategy, focus on the needs of your customers and the benefits you can provide to them.

5. Contact with Previous Customers

A large portion of a mortgage banker’s business comes from previous clients through repeat business and referrals. It’s hard work building relationships with your borrowers during the loan process, so don’t neglect them after their loans have funded. Make sure your past customers know how to contact you.

Everyone for whom you’ve ever closed a loan should hear from you at least a couple times a year. Each communication provides an opportunity for them to refer business to you. A reliable contact management system should be employed to capture every new borrower’s address for future contact.

6. Current Warehouse Lenders

Take the time to evaluate your existing warehouse lenders to make sure they can offer the services you need. If you decide to expand your product offerings to capture additional purchase business, you don’t want your options limited by your warehouse lender. Contact them to review the programs you want to add. Do they offer the Agency and Government products you want? How about Non-QM loans? Can they accommodate third party origination programs for portfolio loans? If not, consider adding another lender who can more fully meet your needs.

With transitions often come opportunities. Focusing on these six key areas can help you make the most of a purchase market and maximize your loan volume.

For more information on Axos Bank’s Warehouse Lending Program and diverse loan solutions for today’s mortgage market, please call 1-888-764-7080 today.