We’re already a quarter of the way through 2015. Spring is almost here, and the flowers are getting ready to bloom. Planting a garden offers great opportunity to reap reward. Annuals are nice; with proper nurturing, you see them grow from just a small seed to a bountiful harvest. Perennials are even better. With the same nurturing, you see them grow not once, but many times over many seasons, giving you a bounty each year.
The same can be said for borrowers. Annuals come in daily. They are first-time homebuyers, millennials, empty nesters, and everything in between. Over the last few months we gave you the inside scoop on millennial homebuyers. With this generation being the largest since the baby boomers and reaching an age where buying a home is a possibility, the opportunity is real. However, there’s another market segment you don’t want to miss out on: investment borrowers. If you keep these perennial borrowers happy, they are more than likely to come back the next time they find their next investment property or home. As someone who has purchased multiple properties and is back looking for another, allow me to provide some insight on targeting this group.
Perhaps the most-bang-for-your-buck mortgage segment, investment borrowers seek to buy a new property every few years, often renting or flipping as they go. With homeownership rates still sitting at record lows and interest rates doing the same, investors are looking to capitalize on this rent-centric market. These investors face one problem: housing prices are rising. Many that could once use cash-on-hand to buy properties are now more likely to need a loan.
That’s where you come in. If you want to target these potential borrowers, there are a couple of things you must keep in mind.
First, investment borrowers know what they’re doing; little education is needed. Instead, their first priority is a smooth, trouble-free experience from application through closing. Often, investment borrowers are on the go. They want to apply online and see their loan status whenever convenient for them. Make sure you have an online portal in place to support this. The portal should also allow document upload to streamline the process. Unless these tools are in place, investment borrowers are likely to take their business elsewhere.
Communication is nearly as important as efficiency. As mentioned, this group is well aware of the process and will be sure to tell you so. However, rules change, and each loan is different. Educate the borrower upfront on recent changes (think: Know Before You Owe), and keep the lines of communication open so that there are no surprises. Perhaps more importantly: educate your loan officers. They are the lifeline to the borrower. Set your team up for success through proper training. This will allow the best customer service experience possible.
Finally, investment borrowers are number crunchers. They track to dates, totals, and cash flow. As a result, every deadline, amount they owe, and date you give them will be added to their spreadsheets. Set proper expectations. The mortgage process doesn’t always go according to plan. Dates get pushed out, and unforeseen issues arise. It’s important to let your investment borrower know as soon as possible if things change. In addition, having the proper origination technology in place ensures the right people are working on the loan at the right time. The efficiency gained from workflow automation, rules, and triggers can make the difference between closing on time and having to reset expectations.
As we all know, the origination process isn’t always easy. Each borrower is different, deadlines change, and regulations evolve. Just as in a garden, inclement weather can prove challenging. Fortunately, the basic tools needed to please investment or “perennial” borrowers are the same tools needed for most “annual” borrowers. Provide great customer service and the proper technology, and your mortgage garden will surely bloom.
That is why it is so important to educate your people on how to provide a superior level of customer service. Your loan officers should know how to provide transparency, set expectations, and give proper guidance. You also need to make sure you have the proper technology in place to streamline your processes while keeping up with the times. An easy-to-use borrower-facing web portal is no longer optional. Equally important are the back-end tools. Make sure you have an advanced system capable of streamlining the origination process and getting borrowers to the closing table on time. Begin nurturing your borrowers now, and pretty soon you will have a garden full of both annuals and perennials – the combination every lender needs to be successful.