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When Will the Refinance Boom End?

By · November 8, 2012 · Filed in Mortgage Commentary, Mortgage Marketing · Comments Off

It’s hardly a secret that the latest refinance boom helped the mortgage industry rebound in 2012. The Federal Reserve committed to low rates for 2 more years and QE3 has kept money flowing into this anemic economy. Certainly record low interest rates certainly have helped stimulate home purchasing, but a majority of the properties bought have been investor-driven. But many home buying prospects remain on the sidelines because they are unable to meet today’s strict home loan guidelines that require higher credit scores and acceptable income documentation.

The HARP 2.0 served up a significant opportunity for refinance activity when Fannie Mae and Freddie Mac removed the LTV restrictions on the Home Affordable Refinance Program. The HARP opportunities have helped this year but the activity for qualified HARP applicants is rapidly dropping because for the most part people that were eligible for HARP 2.0 either refinanced or are in process now. The most significant demand for borrowers in need of refinancing in 2013 is homeowners that do not meet the HARP 2.0 criteria. Will HARP 3.0 arrive any time soon?

Can Home Refinancing Support 2013 Loan Origination?

Credit scores have been increasing for some homeowners so we may see a new wave of eligible borrowers looking to cash in on record low rates. Hopefully the new wave of 620 – 660 fico borrowers will still be employed with income that can be documented for loan purposes. According to NAR, housing starts and property values have increased since last year but, job security remains a major concern going forward. This employment issue may be an obstacle for increased home purchase activity but only time will tell. The negative effects of the Federal Reserve printing “funny money” will make an impact sometime in the near future.

Let’s be honest the “refi-boom” can’t go on forever. Sure 2013 will see more activity as interest rates will remain low. The pool of qualified borrowers has refinanced and refinanced again. Homeowners that didn’t qualify for refinancing in 2011 and 2012 likely won’t qualify in 2013 either. 80% of loans closed in 2012 were refinance transactions. Until private money returns to the mortgage market, there is very little evidence that the refinance activity will continue at its current pace. Is the “refinance boom” coming to an end? Will rising unemployment reduce the pool of qualified borrowers? The unfortunate reality is that there are more unqualified homeowners than qualified ones.

We suggest diversifying your niches to include purchase loan programs in addition to marketing the refinance business that is presently filling your pipeline. If HARP 3.0 does arrive in the coming months then we can reconvene and discuss the emerging opportunities that would extend the current refinance boom through 2014. Until then, try to incorporate more purchase money and develop your “bank of business” for the years to come.

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Maximizing Mortgage Lead Opportunities Online

Every time the banks tighten loan guidelines, it makes buying qualified mortgage leads more critical.  Mortgage marketing continues to unravel for many top mortgage companies, because the cost of business is rising yet in most cases the revenues are decreasing. 

How does a mortgage company spend their marketing dollar more wisely with mortgage leads?  The first step is to align your company with a mortgage lead generation company that offers leads that are not sold too many times.  Another important step is to partner with a lead company that is generating mortgage leads from applicants who really want a loan.  Buying leads from consumers that want to win an iPad rather than lock an interest rate will not help your cost to funding ratio.  Consider buying real-time mortgage leads or live transfer mortgage leads.  Even though they tend to cost more, the contact rates will be much higher and usually your cost to funding ratio will be much lower. 

Another important step to maximizing your mortgage marketing dollars is lead management.  Make sure your loan officers are calling the leads in a timely manner and verify that they are handling the calls the way you would like them too.  In many cases a loan officer will get bogged down with a few loans in process and then they will pretend to call new leads.  It is not uncommon for loan officers to fake following up on new leads.  Mortgage lead buyers need to evaluate the time a loan officer received the lead and the time they actually called the lead.  How many times are your loan officers calling on the leads?  Are they also following up with these applicants by email?  Remember that with internet mortgage leads, quite often the applicants prefer to communicate by email, so if your loan officers are only calling on the leads, then they are not managing the leads right.  And then of course there are the loan officers that only email the loan applicants because they don’t want to pick up the phone.  You need loan professionals calling and emailing the mortgage lead prospects to maximize online mortgage marketing.

The Lead Planet will create a custom lead generation program for you and your loan company. Take advantage of search engine optimization and consider our mortgage websites to help bolster your image and presence online.  Call the Lead Planet at 619-600-5720 and ask about our Free Mortgage Lead Incentives for new accounts.

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Mortgage Lead Buying Secrets

Believe it or not there is an art to buying internet mortgage leads.  Loan companies need to play the lead buying game some skill if they want to maximize their opportunities on the mortgage leads they invested in.  Sure it is important to hire a talented staff of loan officers with a competent sales manager that will make sure the leads get called in a timely manner.  Yes it is a good idea to integrate a lead management system like Leads 360 or Lead Mailbox.  But if you do all of that, are there any guarantees that you will get a good return on the home loan leads you bought with such good intentions.  Sadly no; in today’s mortgage market, loan originators have their hands full finding a borrower who qualifies because the lending guidelines have tightened to the point of being ridiculous. 

A recent Lead Planet survey found that less than 2 out of 10 loan applicants qualified for the home loan in which they applied for online.  A few years ago, a similar survey was taken and found that nearly 7 out of 10 applicants qualified.  Unfortunately the housing sector crashed, so millions of Americans lost their home equity and stated income loans were allowed and even encouraged. 

My advice for lead buyers is to find a lead company that doesn’t sell your leads too many times.  The Lead Planet sells their leads 1-3 times.  You want to find a mortgage lead source that has a contact rate.  With nearly a 90% companywide contact rate, the Lead Planet provides mortgage marketing that loan companies can work with.  Your loan team deserves to speak with loan applicants that eager to get a loan, rather than win a contest that offers them a free ipad.   Buying exclusive mortgage leads is nice, but can you afford not to buy non-exclusive leads that are half the price. 

Last week the Wall street Journal reported that refinance loan applications rose dramatically in April and this week Freddie Mac issued their report that home purchase loan applications had reached a 13-year low. Is this a true indication of the demand for home financing or the reality of the lending guidelines and underwriting for mortgage loans has tightened to the point that most borrowers already know they do not qualify. 

With interest rates at all-time lows and millions of borrowers needing to refinance out of their adjustable rate mortgage, you would think the lead volumes would be sky-rocketing.  The good news for loan companies out there that have not quit and can still afford to keep the lights on, is that the tide will turn.  Private money will come back into the market place and new loan programs will arise that create new opportunities for loan officers to close more loans.  Until then, get some good lending niches, FHA, VA, 203k, etc. Stay lean and mean and it wouldn’t hurt to find a lead company that you can trust. 

Our lead team can help with with lead generation, mortgage marketing and even search engine optimization. Call the Lead Planet at 619-600-5720 for a no cost lead buying consultation.

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3 Effective Ways to Buy Internet Mortgage Leads

Buying mortgage leads online can be a daunting task for marketing managers, loan officers and mortgage company owners.  When shopping for internet mortgage leads, there are a few important factors to consider.  Don’t get fixated on cheap leads and the cost of mortgage leads.  At the end of the day, the cost to fund a loan is the only thing that matters.  Don’t put all your eggs in one basket.  Consider several mortgage marketing companies.  Whether choosing between FHA mortgage leads or refinance leads, make sure you set up filers for State and loan type. 

  1. Buy Mortgage Leads from a Direct Lead Provider
  2. Compare the Cost of Funding Ratio rather than Cost of Mortgage Leads.
  3. Buy Mortgage Leads from Multiple Sources online.

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