The Art of Mortgage Loan Originator Success: It’s More Than Just Interest Rates
High Interest Rates? No Problemo!
Whenever I encounter a mortgage loan originator complaining that interest rates are too high, I respond by offering my MLO mentoring services. You see, there’s absolute validity in the old adage, “When the going gets tough, the tough get going!” As long as a mortgage loan originator bases his or her ability to succeed on market interest rates, he or she will never join the ranks of the top producers. Interest rates should never determine the mortgage loan originator’s success. Higher rate environments require digging in to come up with “outside the box” creativity to capture the business that’s still abundantly available.
Purchase Business is Where it’s At!
I don’t mean to imply that interest rates are not important; they definitely are. But, unfortunately, the “shooting fish in a barrel” ease of mortgage loan origination, prevalent from the mid-2000’s through recent times, was far from the norm. Throughout these years, mortgage originations embodied historically-low interest rates that lured many unsuspecting loan originators into grossly-delusional complacency.
Most loan originators who began their mortgage careers after 2006 unofficially defined themselves as “mortgage loan refinancers” considering that the vast majority of the loans that they originated consisted of refinances. Unfortunately, the priorities of these individuals became, understandably, skewed. A mortgage loan originator’s primary focus should be the pursuit of purchase business. Self-sourced purchase business should become the staple of the mortgage loan originator’s pipeline. Any refinances into which the loan originator falls should be considered a bonus.
For obvious reasons, purchase borrowers are focused on interest rates less intensely than refinance borrowers. I’m not arguing that someone who is seeking a mortgage to purchase his or her new home will not be interested in the loan’s interest rate. But, if the price is right and they’re comfortable with the payment, the purchase borrower’s attention will be focused on something else – being able to call the home that he or she desires his or her own.
Have you ever purchased something without competitively shopping? You may very well have had the opportunity to competitively shop but you didn’t. Why? Maybe you liked and trusted the salesperson who made you feel comfortable. Maybe you wanted whatever it was that you were purchasing right then and were comfortable with the price. The bottom line is that it wasn’t the price that sold you. Something else did.
I am not asserting that pricing is never important. If you were in a store wanting to purchase noise-cancelling headphones and the retail price was $2,500, you would most likely balk even if you really liked them. Similarly, if your company is offering 9.875% for a 30-year fixed-rate loan with zero points while your competitor offers the same loan at 4.625%, you would unquestionably be outpricing yourself. But the truth of the matter is that most lenders’ prices are relatively similar to their competition’s.
There Will Always Be Rate Shoppers
Most mortgage shoppers are never trained on how to go about finding the perfect mortgage They may conduct some basic research through the internet or ask their friends or family, but most of the time the only thing that they know to ask a loan originator is about their rate.
Answering this question forces the MLO to educate the inquirer because, as you likely know, numerous factors influence rate:
• Loan product;
• The transaction’s purpose (purchase or refinance);
• Loan-to-value;
• Loan amount; and
• The borrower’s credit score
just to name a few. Any MLO who simply replies to that inquiry by quoting an interest rate is not a competent loan originator.
When asked about your interest rate, why not capitalize on the opportunity to educate your customer as to what goes into the interest rate that you would ultimately be able to offer? Doing so will establish your professionalism and start building trust.
There are, undoubtedly, people who call for a rate and that’s all they want. Most of the time, people who call and simply demand a rate are not serious borrower prospects. Politely explain why you can’t simply quote a rate and let them go on their way without giving them a second thought. They likely weren’t going to buy from you anyway. There are many more serious prospects on whom you should focus.
You’re More than Your Rate
May I ask you to ask yourself something, please? What would make you buy something without shopping around? Take a few moments and really think about this. The answers with which you come up will help you turn rate shoppers into customers who love you. What do you have to offer your customers beyond an interest rate?
Trust will naturally evolve by genuinely getting to know your customer. With trust will emerge the customer’s true wants and needs. Now I, in absolutely no way, condone or encourage you to take advantage of this trust and use what they share with you to manipulate them. Most people can sense when they’re being manipulated from a mile away anyway.
Mortgage Superstars Don’t Focus on Rate
I was an award-winning, multi-million dollar, top loan producer when the 30-year fixed rate was 9.875%! Rate should never define success. The successful MLO is a purchase-hungry, empathy-laden, knowledgeable communicator who realizes that a sale’s success lies in learning, understanding, and catering to the customer’s needs and wants.
One of my biggest bucket list items is to go deep sea tuna fishing. Imagine you’re a charter boat captain who learns of this, assures me that you can put me on seemingly endless schools of bluefin and yellowfin tuna by 11:30 tomorrow morning, and you’re able to do it all for a price that I’m comfortable spending. Do you think that my response to you is going to be, “Great! But let me shop this around and I’ll get back to you if I’m interested!”? No way! My response to you will be, “What time should I be at the dock?”! Understanding and catering to your customer’s wants and needs, while offering a price that they’re comfortable paying for the satisfaction of those wants and needs, will earn you that customer’s commitment.
There will always be lenders with higher rates and lower rates. But if your potential customer is comfortable with the payment you’re offering, what other source of value can you offer them? Afterall, it’s the home on which they should be primarily obsessed, not its financing.
Create a package of value for your customer. This does not mean assuring them that you have the best service and the best processors, and the best underwriters because everybody else is making the same exact claim. What can you offer that’s tangible? What do they get by committing to you that’s more than just rate? Some examples of added value that you can offer your customers for working with you are:
• Offering them a free annual credit report review;
• Providing referrals to quality movers, house cleaners, and pet sitters;
• Giving them an annual neighborhood analysis of crime statistics;
• Creating a coupon book valid at local businesses; and
• Issuing a monthly newsletter catered to homeowners.
This list is limited only by your imagination (just be mindful of the prohibitions established through the Real Estate Settlement Procedures Act).
Not only will these extras tip the scales in your favor, but they’ll also help you maintain post-closing, top-of-the-mind awareness leading to many, many referrals.
The Beauty of Referrals
Top-producing loan originators rarely focus on marketing. Why? Because their customers do it for them. By creating customers who love you, you’re guaranteed to get referrals. And people who are referred to you will, more times than not, place more significance in the fact that they were referred to you by someone who they trust than in the rate that you’re offering them.
Conclusion
The pipelines of top-producing mortgage loan originators are rarely influenced by the rate of the loans that they are selling. The top-level MLO’s success surmounts the rate that he or she offers because the customer finds value in working with them. Restructure your thinking to align with this strategy and you’ll never again cringe when you hear a potential customer ask, “What is your rate?”