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   ARTICLE   |   From Scotsman Guide Residential Edition   |   December 2016

The Ultimate Holiday Gift Guide

Renovation loans are the perfect present for everyone on your list

The Ultimate Holiday Gift Guide

As the year comes to a close, it’s always a good idea to reflect on the success you had and what you could have done better. For most originators, despite dire predictions from “experts,” it was a pretty good year. The industry bounced back from the headaches over implementing the TRID consumer-disclosure rules and many mortgage professionals actually saw business grow in 2016.

But even if 2016 was a great year for you, your success in 2017 is far from guaranteed. The changes that can affect your future are often beyond your control, which can cause a great deal of stress. Add to that the massive amount of stress the holiday season brings, and perhaps it’s time to give yourself a present.

Gift giving can take its toll on minds, bodies and wallets, and mortgage loan originators are a busy group of people. When they’re not in “hurry up and wait” mode with borrowers, the best originators are out there networking and connecting in their local community.

So if you’re an originator who is always on the move, what would be the perfect gift? How about something that will give back to you in spades? Renovation, or reno, loan programs are the gift that keeps on giving. Some may laugh at this, but it’s true. Remember that adage about giving a man a fish versus teaching him how to fish?

The gift that keeps on giving

Reno loans provide something that traditional fixed-rate mortgages will not: guaranteed repeat business. Who doesn’t want that? It is very common for reno borrowers to refinance their mortgages shortly after their renovations are completed. All it takes to get a second commission is for the originator to stay in touch with his or her reno borrowers and remind them of their options when the time is right.

These loans are not just for foreclosures or homes in dire need of repairs. In addition to relatively minor upgrades and crucial repair work, these mortgages can be used for both luxury items and nonessential improvements.

Originators who have renovation loans in their professional toolboxes should be the most popular people in their local Realtor communities. Why? Think of reno loans as the power tools everyone wants to borrow, but few people own or know how to use.

Many neighbors can lend out basic tools, like saws or snow shovels. Reno loans are like snow blowers and chain saws. You may not need a snowblower every day, but when the snow falls heavy and fast, you’ll be glad you know a neighbor who has one. And good neighbors often get those favors returned to them.

Originators who have renovation loans in their professional toolboxes
should be the most popular people in their local Realtor communities.

From Realtors to contractors, to you, the originator, renovation loans truly benefit everyone involved in the housing industry. That brings us to the next person on your holiday shopping list

Give Realtors the power of magic

Realtors are literally the public face of the housing industry. Their headshots appear on bus shelters and online. Like originators, Realtors also are always on the move.

Ask Realtors about their biggest pain points and many will tell you two things. First, millennials are just too fickle when it comes to buying homes. Second, they have too many home listings that have been on the market far too long.

So what’s a great gift for these public-facing workhorses of our industry? A new camera to take better pictures of homes? A co-op advertising package? At the risk of regifting, perhaps originators should give Realtors the power of renovation lending. To do it right, however, reno lending needs to be wrapped differently for Realtors than how lenders wrap it for originators.

Today’s homebuyers are looking for unicorns when it comes to homeownership. They want properties that have all the features and amenities they want, in the right location and at an affordable price. In short, they want Realtors to perform magic and make properties appear that simply don’t exist.

Renovation loans are that magic. If a Realtor doesn’t understand the magic of reno loans, however, they won’t even mention them to buyers. This is why originators need to rewrap reno loans with a nice bow for their Realtor friends. It has to be a package they want to open.

Don’t simply e-mail flyers telling Realtors how great your reno-loan products are. Let experts show them the magic. Invite a Realtor to go with you to a renovation-lending seminar, which happen frequently across the country, and let them hear firsthand about how these products can be used. This will give them the opportunity to ask questions and see, in person, that there is real science behind the magic of reno loans.

If there isn’t a local seminar taking place, then create your own by hosting an event tied to a webinar on the topic. Offer to cater a lunch for a Realtor’s office, and sit with their colleagues as you watch the online event together. Once they see how renovation loans can turn any mundane property into a fabled unicorn home, they will be hooked — and grateful for the gift.

What about grandma?

Few gifts are really “one-size-fits-all,” but renovation loans are actually the perfect gift for not just grandma, but also for the empty-nester mom and the new dad. As with Realtors, it’s all about how you wrap it up.

Many seniors plan to scale back their housing situations to structures that are easier to maintain later in life. Unfortunately, these homeowners can find it hard to sell their properties when they are ready to downsize because their homes may not be market ready.

Think about the new father. Here is another borrower who
can benefit from the gift of a renovation mortgage.

Convincing buyers that reno loans provide a solution to this issue is one way to go, but senior borrowers who refinance with a renovation mortgage can make a huge investment in their own future. By making those upgrades now, these seniors can ensure they have desirable homes that people will want to buy when they put them on the market in the future.

The empty-nester mother, the longstanding matriarch of the house, is another person for whom a renovation mortgage would make a great gift. This woman spent decades as the lynchpin of her family, doing everything for everyone, but very little for herself. Now that her kids are out of the house, she wants to entertain and relax and, quite frankly, she deserves it.

This is where the luxury component of refinancing with a renovation loan comes into play. In addition to remodeling the kitchen to make it more conducive to family gatherings, reno loans have other uses, including knocking down walls to create open floor plans and adding amenities outside the home, such as a new deck or hot tub. Even though these luxury items are an investment in the queen of the castle’s quality of life now, they also help add value to the home for when she’s ready to sell later on.

Finally, think about the new father. Here is another borrower who can benefit from the gift of a renovation mortgage. Having a family does not mean that football Sunday needs to be put on hold or that this dad has to go into exile.

Instead of banishing him to a dingy basement or a dirty garage on Sundays, where none of his friends will want to hang out, a renovation mortgage through a refinance or even a new purchase can be the play this borrower needs to ensure a winning season.

Converting a basement or garage from a cave where dad goes to hide into a kingdom his friends will want to visit is well within the scope of what reno products can do. He can redo the floors, paint the walls, upgrade the windows and add a bathroom to create the ultimate football-Sunday stadium.

•  •  •

Many people enjoy a little downtime at the end of the year. After all, you worked hard to get there, so you should enjoy everything you earned. At the same time, when you ease off the gas for too long, you will eventually lose critical momentum for when things get tough again. For stress-free success during this holiday season — and in the year to come — begin your holiday shopping as soon as possible. The more proactive you are with your gift giving, the more prepared you’ll be.


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