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   ARTICLE   |   From Scotsman Guide Residential Edition   |   October 2017

Transform Turndowns into Done Deals

Educating unqualified borrowers can increase your closings

r_2017-10_stuart_spotRemember the last time you told prospective borrowers the bad news that they did not qualify for a mortgage? Well, guess what? That “turndown” you sent on their way contacted one of your competitors, who gave them some helpful information about where they could get credit-building advice.

The borrowers you rejected appreciated the help from your competitor so much they went back to that originator three months later, after improving their credit, and closed a loan. Your competitor just made a commission you could have made, but you didn’t have the foresight to help that client. Instead, you turned them away. Time to wake up. You just spent your marketing funds to help a competitor close a loan.

The preceding is just a hypothetical example, but such scenarios play out in the real business world daily. Are you turning potential borrowers away without giving them a chance to become future and repeat clients who most likely will refer family and friends? Do not turn them away and leave those potential borrowers discouraged and frustrated at the whole process.

Many potential borrowers consider a rejection as a brick wall they never want to encounter again. You are doing yourself, your company and your clients a disservice if you don’t at least try to help all potential borrowers. You will close more loans when you offer solutions and resources to help potential borrowers.

Have a plan

If you are tired of a large percentage of your prospects being unqualified for a mortgage loan after spending time and money marketing to them, you need to think about putting those unqualified prospects on the right track to become highly qualified applicants. Educating prospective borrowers is a win-win for everyone.

Building credit power to qualify for a mortgage loan is not a lesson taught in schools. We just expect people to know how to work on their credit to qualify for a mortgage loan. It’s time to stop keeping it a secret. We need to educate our prospective borrowers on what they need to do and work toward in order to position themselves for a mortgage.

Sharing ideas and solutions is always a better approach. Take a few minutes to extend a helping hand and send a potential borrower in the right direction. Many people have lost their homes or have credit issues. These issues can be fixed, changing turndowns into potential future borrowers. This may not happen within the next 30, 60 or 90 days, but it is attainable in the near future.

Let prospective borrowers know it is never too late to start building their credit power.

In addition, it pays to help educate real estate agents to not turn away potential buyers who say they are not currently pre-approved for a mortgage. Prepare a plan to educate potential borrowers and do what you can to encourage and guide them to becoming highly qualified applicants.

Be proactive

If you have a tree full of green peaches; some will ripen sooner than others. Do not reject the green peaches among borrowers as a mortgage originator. Leave them on the tree and take care of them until they become sweet and juicy.

You are marketing to attract a specific demographic. Unfortunately, they just aren’t all qualified on day one. Instead of taking the approach of spending a lot of money to find qualified borrowers in this limited pool, change your marketing to include the following:

  • Offer free seminars on “How to Qualify for a Mortgage Loan” or “How to raise your credit score.”
  • Share links to free resources on your website and in your social media posts.
  • Offer a free consultation to soften the fear of applying for a mortgage loan.
  • Offer a check-off list of information for filling out a standard 1003 mortgage application.
  • Offer tips of the day on building good credit, how to qualify for the lowest interest rates and what underwriters are looking for on a mortgage application.
  • Create a simple app or calendar reminder to help your clients follow the simple steps to becoming highly qualified applicants.
  • Inspire your prospective borrowers to make the effort to learn and apply what it takes to get a lower interest rate. Remember, if it is at all possible, you should help clients who truly desire to buy a home or investment property to attain that goal.

Embrace opportunity

There are many ways to help clients achieve the dream of homeownership, even marginal or currently unqualified prospective borrowers. It all starts with having a plan and then putting in the work.

Let prospective borrowers know it is never too late to start building their credit power. Buy them a book on qualifying for a mortgage loan or building credit. You should read each book you give away so you can discuss the content with your clients. You do not want to suggest anything you do not agree with or understand yourself.

Take clients to free seminars. If you are there with them, you can build your relationship and answer questions they might have. Or develop a PowerPoint presentation and start giving seminars yourself. The more knowledgeable you are, the more confident you will become in staging your own seminars.

Give prospective borrowers a sample 1003 mortgage application to review. Some people will give up on a quest for a home just because of the fear of filling out the application. Provide your clients with a glossary of loan terminology as well. Getting familiar with the 1003 form and knowing the terminology will ease the fear for first-time borrowers.

If your prospective borrower still needs help, give them a gift certificate for a one-hour, one-on-one credit consultation with a financial professional. Listen carefully to each prospective borrower so you can custom design a plan and offer solutions that take into consideration their credit issues and desires. Be creative and think of other ideas you can pursue to nurture the prospective borrowers you are working with.

If real estate agents and mortgage originators in your area are unwilling to extend a helping hand to borrowers with credit nicks and dings, you can even pick up business by asking those mortgage professionals to refer their turndowns to you. Become the local who is willing to supply prospective borrowers with information and resources to repair and build their credit power.

• • •

The more borrowers you help, the more your business will benefit. Old-fashioned common sense says that every borrower you succeed in getting funded represents a success for you, both personally and in terms of business.

Helping people creates loyal clients, who, in turn, refer their friends and family to you down the road. It only takes a little extra time to be helpful and share resources, and in return you will build your own personal referral team.


 


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