If there ever was a time to get hired in the mortgage industry, the COVID-19 pandemic was it. Mortgage originators were giving out 1.99% interest rates like Oprah giving out fur coats: “You get a low rate! You get a low rate!”
Amid all the upheaval tied to the pandemic, there were two certainties in life: the sun would rise and homeowners would call their lender looking to refinance their mortgages. Many younger mortgage originators transitioned into the business in the past couple of years in search of the fast-paced excitement and the high earnings potential.
There are many ways to help someone secure financing. It’s your job to find their path to obtaining a mortgage.
Fast forward to today and the refinance market is entirely different. Millions of homeowners already took advantage of the historically low interest rates, meaning that the pool of people who could benefit from a refinance has dried up. Times have changed, so originators will need to change to survive.
Not to sound overly dramatic, but this was a life-changing opportunity. For many younger originators who came into the business in the past year, it was a missed opportunity.
The phone would ring in the third and fourth quarters of 2021, and consumers would ask for a rate quote. When you said, “two points,” you would hear the line go dead. It’s almost as if they wanted a zero-percentage interest rate.
This isn’t unexpected in the cyclical mortgage industry. In the real estate and mortgage spaces, there is a constant ebb and flow. The rising and falling tide is the flow between times of rate-and-term refis, purchase loans, debt consolidation, etc.
What the mortgage industry recently experienced was a rip current — not something outside the water’s ebb and flow entirely but a space where the rhythm and trends are a bit more violent, exaggerated and unpredictable. Established mortgage professionals or those who had an existing book of business were obviously the ones who benefited the most. Naturally, younger originators were sitting with their toes in the sand watching the more experienced originators swim.
So, what is the next tide and when will it occur? No one is entirely sure where the market is going. Rates are rising and lending parameters are tightening. Even borrowers are changing. Income is captured and calculated differently. The crypto trader who gets paid for TikTok trends is going to want to buy a house, too. How do you calculate that? If there is any good news for younger originators, this also is new for their more experienced colleagues.
There’s one sure way to keep your lead-conversion rates low. Next time you’re talking to a potential client, tell them, “Oh, I don’t do that kind of loan.” One of the worst feelings in the mortgage world is telling someone you can’t help them, then following up with them a few months later only to find out their deal is done.
Now, maybe you couldn’t help them because you did not gather enough information or you’re still sharpening your sales skills. If you couldn’t help them because you were lacking product knowledge or creativity, that’s a problem.
Your objective should be to help every borrower in every scenario. Yes, every single one. Why not? What else are you going to do while you wait for the phone to ring? This means that you need to familiarize yourself with the specifications on U.S. Department of Veterans Affairs loans or Federal Housing Administration (FHA) loans. You need to be able to handle every prospective borrower, from someone who is self-employed to someone looking to buy a non-owner-occupied house.
Think about this for a minute. The vast majority of originators can handle conventional and FHA loans, but if that’s the extent of your experience, you’re not serving the borrower or yourself. You need to use this time to start understanding different loan products. Otherwise, you’re telling yourself, “If a client comes to me, I will simply point them somewhere else or to Google.”
The flood of refinances from the past couple of years is over. Now is the time to prepare yourself for a long career. You can do this by mastering current product offerings, by educating yourself on new and existing mortgage products, and maybe even by developing a mortgage product. Why not, right?
You’ll also need to start earning referrals. If you want to make a career in the mortgage industry, be kind, curious and honest. There are many ways to help someone secure financing. It’s your job to find their path to obtaining a mortgage. This can be accomplished by educating yourself on as many loan products as possible. The more you know, the more mortgages you can fund.
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Many originators are transitioning into the business while the market simultaneously shifts from the hottest refinance boom in history to the most competitive purchase market in history. It’s disheartening to know how many originators won’t be here in a few months or years. It’s also exciting, because now is the time to build your career. The ones who will be here tomorrow are the ones who are preparing today. ●