How To Differentiate and Succeed in Today’s Mortgage Market
Reading time • 10 mins
By Matic
After the Federal Reserve’s first half-point rate cut in September 2024, mortgage and refinance applications jumped 14.2% and 24% in a single week, respectively. That’s good news for mortgage loan originators looking to grow their business moving forward. But as applications grow, it’s important to incorporate strategies to differentiate yourself from the competition — like becoming more user-friendly and tech-savvy while also exploring alternative products and revenue streams.
While housing market issues still exist in terms of inventory and insurance, these strategies could help lenders take advantage of the first sign of growth in years.
Increase efficiencies and cut costs
Now is the time to automate your company’s application processes as much as possible. As business begins to pick up, take the time to invest in the right technology to grow your business in the long term. Technology may remove friction for applicants, reduce workload for mortgage staff, and even help address electronic security concerns. Here are four tech integration ideas to streamline processes and lower costs.
Digital onboarding portals
Implementing a customized onboarding portal gives your customers a smooth process right from the start. These platforms can include security features like facial recognition, document collection, and e-signatures. Integrating a digital signature software gets disclosures and other forms directly in front of applicants quickly and securely, making it easy to meet 72-hour signature deadlines.
This technology makes it simple to track the latest versions of documents and could help you comply with regulatory obligations. Plus, onboarding platforms simplify record keeping and can help keep your applicant’s personal and financial data secure.
Appraisal workflow software
The appraisal process can slow down the time it takes to close, especially with appraisers busier than ever and hard to book (not to mention finish a report). Look for appraisal workflow software that streamlines the process so that things in your loan officers’ control are completed quickly and efficiently.
Workflows automate things like creating an order and verifying vendors, ultimately reducing the number of days it takes to complete the appraisal process.
Automate with AI
More tech companies are creating AI-powered software for mortgage lenders in the form of both loan origination systems and point-of-sale systems. In addition to incorporating guidelines for specific mortgage programs like conventional, FHA, and VA loans, you can teach software to implement internal guidelines. You can also expand customer service to 24/7 with chatbots that synthesize all this information to deliver accurate responses for applicants.
The result? Streamlined workflows for you and your team, faster time to close, and reduced risk of human error. Plus, most platforms are designed to incorporate into your existing tech stack. In 2023, 22% of lenders utilized AI in their operations, with the vast majority citing operational efficiency as the primary reason for adoption.
Integrated home insurance offers
Getting a homeowners insurance policy is often overlooked by borrowers, resulting in a stressful, last-minute scramble before closing. Remove this burden by incorporating personalized home insurance offers through a licensed agency into your platform. Providing customers with digital tools like this will help them comparison shop, purchase insurance, and feel good about their buying experience.
Plus, embedded home insurance can incorporate your own branding on landing pages, so the design is consistent with the rest of your platform branding. And with zero-click or one-click integration options, it’s not an intensive change that will disrupt your team’s focus.
Interested in offering home insurance to your borrowers? Matic’s embedded insurance solutions were built for the mortgage industry, helping to automate the insurance process and add a new revenue stream for your business. Learn more and request a demo here.
Look for alternative sources of revenue
With rising rates impacting both new mortgages and refinance applications, it’s time for lenders to look at other streams of income to offset these declines. Get started with these ideas to add to your revenue strategy for 2023.
Home equity loans and LOCs
Even if property values aren’t increasing as quickly as they have over the past two years, the average continues to grow at a moderate pace. Educate your audience on the benefits of these loans, including potential tax deductions when the funds are used for home improvements.
Embedded home insurance
Embedding home insurance incorporates the home insurance shopping process directly into your borrower-facing mortgage platform. Not only does this integration add value for your customers, it also expedites the closing process and reduces the risk of rate lock extensions to protect your margins.
Out-of-box applicants
Use this time to invest in education to target borrowers with lower credit and income thresholds. A lot of studies reveal that consumers who would actually qualify for products like VA loans or low-down payment mortgages don’t realize they’re likely to be eligible. Educate borrowers on topics such as alternative mortgage programs and credit building moves. Also take the time to work with customers who may require additional income documentation if DTI is tight.
Other types of mortgages
It may be time to expand into other types of mortgage programs, such as HECMs, HECMs for purchase, commercial properties, or investment properties. Tap into your existing client pipeline to target likely audiences, including:
- Seniors who may benefit from a reverse mortgage
- Small business owners who may want to finance a commercial building
- Higher income individuals who want to invest in a vacation rental property or multi-family property
Invest in the customer experience and customer retention
According to a recent McKinsey & Co. report, customers prefer to have an existing relationship when choosing a lender. It’s crucial to develop new touchpoints that drive engagement and build loyalty. Take a holistic approach to the relationship by providing educational content that offers value using other products. Not only does this set up your mortgage company as a trusted resource, it also builds trust that you view your customers as more than an application number.
Delivering value-based resources
How do you deliver value-based content in a way that feels authentic? Start by identifying areas of a borrower’s life that are relevant to the home buying process, then introduce value from other products. For instance, you might send them tips on building and maintaining their credit score, particularly leading up to the loan closing. Also maximize your borrower portal features, including real-time application status and in-app messaging.
Building referral partnerships
There are a number of ways to grow your referral partnerships with real estate agents and financial advisors in a way that is specific to today’s economic landscape. Many buyers are purchasing second and vacation homes using all-cash. While interest rates have risen, we know that they’re still historically low and far below the average stock market return over the last 20 years.
Use this narrative as a cornerstone of marketing to your referral partners. Financial advisors can help guide potential buyers in this niche to consider other investments besides an all-cash purchase. Similarly, real estate agents can also help their clients explore the pros and cons as they look at different properties together.
Offering relevant products
You can also offer borrowers a complementary product, like home insurance, that helps them save money and check off their home insurance requirement. The benefit here is two-fold: it’s the borrower’s responsibility to find a home insurance policy, so you’re helping to take one thing off their plate in the days and weeks leading up to closing. Secondly, finding affordable home insurance gets the borrower to focus on their overall monthly housing cost, not just the mortgage principal and interest.
Matic compares rates from over 40 A-rated carriers to find the best options for borrowers. On average, we save customers $639 per year*, lowering their overall debt-to-income ratio. Identifying low-cost insurance solutions early in the process helps avoid a last-minute delay or even cancellation of closing because the borrower couldn’t find an affordable insurance policy. It also saves lenders money by avoiding costly rate lock extensions due to borrowers not getting a policy in time.
Similarly, refinancing customers typically start the process with the hopes of lowering their monthly mortgage costs. Building in an extra way to save can serve as a major differentiator when competing for customers.
Providing annual equity updates
Retain customers over the long-term by sending them annual or semi-annual updates on their current home equity. This sets you up as a trusted advisor and keeps you front of mind when they’re ready to either leverage their equity or purchase a new property.
In addition to providing equity estimates, incorporate education around what they can do with that equity, such as making a down payment on a second home or investing in a home renovation.
Set your loan officers up for success
Investing in human capital is great for your business as well as for retaining your best staff. Explore these ideas to help develop and support your loan officers.
Loan officer training ideas
Continue to invest in loan officer education and development. This could be through online courses, in-person conferences, and coaching programs. There are more resources available than ever that extend well beyond regulatory continuing education requirements.
For instance, offer resources for loan officers to establish a personal brand online. This is a great strategy for building loyalty and retaining customers. And by creating “super fans,” they’ll build an online network of brand ambassadors that organically bring in leads and referrals.
As your loan officers build an online presence, also train them on reputation management, such as best practices for responding to public feedback and how to encourage past clients to publish positive reviews.
Behavioral data also provides huge insights into consumer trends specific to your audience. Teach your loan officers how to analyze data to see where prospects are getting hung up in the application process. Data can also reveal the secret sauce for converting leads, such as chatting with a loan officer online before starting the application. Find ways to dig into your own data mines to uncover what’s working and what’s not.
In addition to one-on-one training, also bring in mortgage industry pros and successful leaders in other industries to educate via group conferences and other thought leadership events.
Encourage loan officers to adopt new technology
You know that streamlined technology is the key to success in the future, but it might feel like a challenge to get your team onboard. Overcome these hurdles by involving your loan officers in the decision-making process from the start. Also focus on the end result right away so LOs can wrap their heads around the benefits. Finally, extend the roll-out of any new technology. Be cautious about implementing advanced features until everyone is comfortable with the basics.
Why Matic?
Created to simplify the homeowners insurance process for lenders and borrowers, Matic’s unbiased platform shops 40+ A-rated carriers for the best price and policy options, saving borrowers days of work and $639* on average. Developed specifically for mortgage partners, our flexible integrations work with your existing technology, requiring little demand on company resources and helping to accelerate closings. And with our industry-leading NPS of 90, we help lenders delight their borrowers — and add a new revenue stream along the way.
Partner with Matic
Interested in partnership opportunities? Request a demo to see how Matic can cut loan cycle times and generate additional revenue while adding authentic value to your customer’s experience from start to finish.
