By understanding your ideal audience, building a website, using social media to your advantage and starting an email marketing strategy, you can generate more leads, stay in touch with clients and grow your online presence. To fully leverage all aspects of digital marketing, originators need a comprehensive understanding of the digital landscape.

“Most, if not all, target audience members spend significant time online — especially people who are looking for houses, looking to refinance or exploring other loan options.”

Having an online presence in this day and age is crucial for growing any business. Most, if not all, target audience members spend significant time online ― especially people who are looking for houses, looking to refinance or exploring other loan options. Meet these people where they spend the most time. Use the digital world to your advantage.

Customer personas

Even if you or your organization have an image of who you are trying to target, it is always a good idea to reevaluate your existing methods. Your target client base may vary as your presence grows or as the industry shifts. There are several ways to explore and refine your intended clients, but market research and the development of customer personas are strong ways to identify any target audience.

“Look at what other mortgage originators are posting. Finding inspiration from influential figures in this space can be beneficial when you’re just starting out or need a marketing strategy refresher.”

Conduct thorough research to gain a deeper understanding of the broader market and then identify smaller segments within it. The use of online surveys, focus groups or industry reports to gather data on what a homebuyer generally looks like nowadays, as well as identifying pain points and trends, can provide insights into the target audience member’s profile.

Customer personas are fictional profiles that embody the characteristics, needs and motivations of specific societal groups. Develop these personas to represent different segments of your target market. Consider factors such as demographics, goals, challenges and preferred communication channels when thinking of ideal personas.

Captivating website

A mortgage originator’s website serves as the cornerstone of their digital marketing efforts. Every originator needs to have an online presence in some shape or form. Acquiring business through phone calls alone will not always cut it.

If you or your organization do not have an online presence, prospective leads will venture to other brokers or lenders, since most consumers search for mortgage programs online. An effective website includes mobile responsiveness, user-friendly navigation, compelling content and strong calls to action. It also emphasizes the significance of lead-capture forms and analytics tools to track website performance and optimize conversions.

Even if you or your organization have a website, it’s smart to log in from time to time in case there are critical updates to implement. An overwhelming majority of clientele browse the internet through their phones, so it’s also a good idea to search your website on your phone to make sure it is optimized for mobile devices. Your IT department or whoever operates your website can tinker around and fix any issues.

With a captivating website comes search engine optimization (SEO) and the plethora of benefits it promises. SEO is one of the pillars in the field of digital marketing — and for good reason. SEO plays a vital role for ensuring a mortgage broker’s visibility in organic search results.

Having a blog section on your website is an easy way to improve how high your site ranks on search engines such as Google. Writing about relevant topics, and using both broad and specific keywords throughout your website, helps to rank your site higher on results pages when people search for your company or relevant keywords.

Meaningful conversations

Social media platforms provide valuable opportunities for mortgage professionals to engage with their target audience and amplify their brand presence. They also emphasize the significance of engaging in meaningful conversations, responding to inquiries promptly and cultivating a strong online community. If you or your company are not using social media, or you notice that the last thing posted was years ago, it’s time to step up.

In this day and age, a brand has to do more than post attractive graphics on Instagram or text blurbs on Twitter. It is important to select the best platform that makes sense for you or your company. Do you want to lead by posting videos? Does your ideal audience consist of older people with a lot of disposable income? Answering these types of questions can help you narrow down the list of platforms you should focus on.

Once you’ve chosen on which platforms to post, creating a content calendar is another good step. A calendar holds the creator accountable and asserts your brand’s online presence. This is also where the type of content you’ll be posting will come into play.

If you want to post more than just videos, choosing TikTok as your only platform is not the smartest option. Look at what other mortgage originators are posting. Finding inspiration from influential figures in this space can be beneficial when you’re just starting out or need a marketing strategy refresher. You can also determine your posting frequency or schedule creative posts on certain days of the week.

Relevant emails

Email marketing remains a powerful tool for nurturing leads and maintaining relationships with clients. It is also a cost-effective way to reach potential clients.

Originators can use email marketing to send personalized messages to subscribers, such as newsletters, updates and promotional offers. Sending clients emails to celebrate birthdays and holidays, or notifying them about refinancing opportunities, pays off in the long run.

In a competitive industry, staying top of mind is crucial when converting prospects into qualified leads. When you or your team receives contact information from a potential client, store it in whatever platform you work with. Many customer relationship management platforms have the ability to send marketing emails, and there are numerous third-party email campaign platforms to choose from.

● ● ●

Digital marketing presents a wealth of opportunities for mortgage brokers and loan originators to expand their reach, attract qualified leads and build strong relationships with clients. By embracing your ideal audience, building a website, using social media to your advantage and starting an email marketing strategy, mortgage professionals can position themselves as industry leaders and stay ahead in the dynamic world of digital marketing.

Remember, the key lies in understanding that you need to meet your clients where they spend the most time. This will help you become the first choice in a highly competitive consumer channel. Embrace the power of digital marketing and watch your mortgage business flourish in the digital era. ●

The post Meet People Where They Spend the Most Time appeared first on Scotsman Guide.

With the rise of the gig economy and an increasing number of people starting their own businesses, originators shouldn’t overlook this group of clients who are looking to purchase homes. It’s important to understand the right approach and best practices for helping these entrepreneurial clients achieve their homeownership dreams.

Financial details

The first step in working with these clients is to understand their unique financial situations. Self-employed borrowers may have fluctuating income or may write off expenses on their tax returns, which can lower their taxable income.

As a mortgage originator, it’s important to understand the applicant’s business model and how they generate revenue to accurately determine their qualifying income. Then you can work with an underwriter to find out if they’ll consider any add-backs for a wide range of business expenses.

“If you have any questions about the client’s tax returns, don’t hesitate to ask for clarification. You’re there for guidance.”

Traditional W-2 employees, depending on their employer, generally have consistent levels of income over time. On the other hand, self-employed individuals may have varying levels of income from year to year, or within the same year, which can pose challenges in qualifying for a mortgage.

If the applicant doesn’t have a regular paycheck coming in each month, it can be difficult for a lender to verify how much money they make, available savings for a downpayment and any necessary cash reserves. As their originator, it is your responsibility to gather as much information as possible about your client’s finances and income (both personal and business) to best serve their needs.

Another major consideration is the borrower’s debt-to-income (DTI) ratio. For self-employed workers, calculating the DTI can be more complicated than it is for traditional W-2 employees. Originators need to ensure their borrower’s DTI is within acceptable limits of the loan program in question. Lenders typically prefer a DTI of no more than 43%, although some may be willing to go higher. If the DTI doesn’t fall where it should, encourage the client to lower the ratio by paying off debts, reducing expenses or increasing their income by writing off fewer expenses.

“Make sure your clients know that credit-building best practices are critical in qualifying for a mortgage that best fits their circumstances.”

One of the best ways to understand a self-employed borrower’s financial situation is to review their tax returns. These provide a wealth of information about an individual’s income, expenses and overall financial health. It’s wise for originators and borrowers to sit down and carefully review these items together. Look for any inconsistencies or red flags that may impact their ability to qualify for a mortgage. If you have any questions about the client’s tax returns, don’t hesitate to ask for clarification. You’re there for guidance.

Proper documentation

Another key factor in understanding your self-employed borrower’s financial situation is to have proper documentation. Entrepreneurs are required to provide more documentation than W-2 wage earners.

They’ll need to provide past tax returns (such as K-1 forms), profit-and-loss statements, balance sheets and bank statements. Additionally, a lender may require some or all of the following information:

• Business debts and monthly payment amounts
• Assets such as savings and investment accounts
• Additional sources of income (alimony, Social Security, etc.)
• Evidence of their business entity or self-employment status (business license, client testimonials, accountant statements, etc.)
• Evidence of recent mortgage or rent payments

Encourage your self-employed borrowers to keep accurate records of their income and expenses. Keeping detailed records helps these clients qualify for the right mortgage and makes the homebuying process smoother.

As their originator, it’s helpful to provide your clients with resources and tools to help them track their finances. For example, you might recommend they use accounting software or work with a financial planner to manage their finances effectively. This also applies to helping them improve their DTI ratio.

Credit scores

Along with understanding your client’s financial situation and having the correct documentation, it’s critical to help them improve their credit score. A borrower’s credit score is important for any loan application, but it’s especially important for those who are self-employed. A solid credit score can help offset any concerns about fluctuating income or tax returns with write-offs.

A strong score is also essential for locking in the best interest rate, but it can be more challenging for entrepreneurs to build their credit than it is for traditional W-2 employees. You should work with your clients to help them build their credit. Have they established their business credit? Do they pay their bills on time? Have they taken on too much debt?

Make sure your clients know that credit-building best practices are critical in qualifying for a mortgage that best fits their circumstances. It’s also helpful for brokers in building strong relationships with lenders. Even if a borrower already has a good score, it doesn’t hurt to encourage them to keep at it. Reinforce the fact that consistently paying their bills on time, keeping their credit utilization low and monitoring their credit report will help to boost their score.

Loan types

There are many types of mortgages available. It’s important to help your self-employed clients choose the right type to fit their needs.

Some self-employed borrowers may benefit from a fixed-rate loan, which offers consistent monthly payments and a stable interest rate (for those with a more stable income). Other borrowers, however, may prefer an adjustable-rate mortgage, which has a lower initial interest rate but is likely to fluctuate over time.

Additionally, some borrowers may benefit from a government-backed mortgage from the Federal Housing Administration or the U.S. Department of Veterans Affairs. These loans have more flexible requirements and lower downpayment barriers, which can make them attractive options for entrepreneurial types who may not qualify for conventional mortgages.

It’s important to note, however, that government-backed mortgages may have additional fees and requirements, such as mortgage insurance premiums. It’s crucial for originators to help their clients understand the pros and cons of each type of loan, then choose the smartest option for their needs.

● ● ●

Working with self-employed borrowers can be more difficult than working with W-2 wage earners. But by understanding their financial situation, organizing the proper documentation, reviewing their credit scores and explaining the different types of mortgages that can work for their circumstances, you can help them qualify for financing and navigate the daunting home purchase process.

The bonus comes in the form of winning a lifelong client. By offering excellent service and advice, you’ll not only help these people achieve their homeownership dreams, you’ll also build long-lasting relationships with them as a trusted loan adviser. ●

The post Dig Deep Into the Details appeared first on Scotsman Guide.

With the rise of the internet, the way people search for home loans has changed drastically. It’s no longer about being listed in the Yellow Pages or having an ad in the local newspaper. Having a strong online presence is crucially important, and this means having a solid search engine optimization (SEO) strategy in place.

“You may think your or your company’s marketing is solid on every other front — such as advertising and social media — but a vast majority of people conduct their research using Google or some other search engine.”

Search engine optimization is the process of improving your website and online content to rank higher on search engine results pages. The goal of SEO is to increase visibility for you or your company, drive more traffic to your website, and increase the number of leads and closed loans.

Some originators may be thinking, “I don’t need to worry about SEO. I get all my business through referrals.” While it’s true that referrals can be a valuable source of business, they’re not the only way to generate leads. One major component of SEO is that it drives more organic (unpaid) traffic to your website. In fact, a strong SEO strategy can actually help you get more referrals by increasing your online visibility and credibility.

Technical know-how

You may think your or your company’s marketing is solid on every other front — such as advertising and social media — but a vast majority of people conduct their research using Google or some other search engine. Having a sound SEO strategy can be the icing on the cake when it comes to positioning you above the competition.

“Compared to other forms of marketing, such as paid advertising or direct mail campaigns, SEO can be a more sustainable and cost-effective way to generate leads and grow your business.”

First, how exactly does SEO work? This topic can become an entire article on its own, but to put it simply, there are a few factors that go into SEO, including:

• Keyword research. This is the process of identifying the keywords and phrases that people are using to search for products or services related to your business. By targeting these keywords on your website and in online content (such as blog posts), you can improve your chances of ranking higher in search results.
• On-page optimization. This involves optimizing the content on your website for the keywords for which you want to be ranked. This includes things like using target keywords in page titles, meta descriptions, headers and body content. This is where content such as updated blog posts can greatly boost your website over your competitors.
• Off-page optimization. This involves building links from other websites to your website. The more high-quality, relevant links you have pointing to your website, the more authoritative your website will appear to search engines.
• Technical optimization. These are the technical aspects of your website that make it more search engine-friendly. They include things like improving site speed, making the website mobile-friendly and ensuring that the website is secure.

Now let’s dive into why SEO is absolutely crucial for mortgage originators. There are obvious reasons why it should be part of every originator’s marketing strategy.

Vital visibility

Google processes billions of searches every day. This means there are a lot of people out there looking for mortgage originators just like you. Whether someone is seeking a loan, researching a specific lender or researching mortgages in general, they are likely to start online with a search engine like Google.

Potential clients begin their search by typing loan-related keywords and phrases into Google, and the most relevant results (content that features the searched keywords) pop up first and foremost. But here’s the thing: If your website doesn’t rank on the first page of search results, you’re missing out on a huge opportunity to get in front of potential clients. In fact, studies show that the top-five search results on Google get nearly 70% of clicks, while results on page two and beyond receive very little traffic.

That’s why it’s important to have a strong SEO strategy in place. By optimizing your website and online content for relevant keywords and phrases, you can increase your chances of ranking higher in search results and getting more visibility online.

In addition to increasing your visibility, a strong SEO strategy can also help build credibility for your business. When someone searches for a mortgage broker online, they are likely to click on the top results that show up in their search. If your website is one of these top results, it can give the impression that your business is reputable and trustworthy.

On the other hand, if your website is buried on the second or third page of search results, it can make your business seem less established and therefore less credible. This can be especially meaningful for originators, who deal with sensitive financial information and transactions. By investing in SEO and improving your search rankings, you can help build trust with potential clients and establish yourself as a credible mortgage broker in your area.

Targeted campaigns

One of the biggest benefits of SEO is that it can help you attract highly targeted traffic to your website. When you optimize your website and content for specific keywords and phrases, you can attract people who are actively searching for the types of loans you offer.

For example, if you specialize in private money loans, you can optimize your website and content for keywords such as “fix-and-flip loans” or “bridge loans.” By doing so, you can attract people who are specifically looking for these types of loans, which can lead to more qualified leads and ultimately more business for you.

Another benefit of SEO is that it can be a cost-effective marketing strategy for mortgage brokers. While there are certain costs associated with it, such as hiring an SEO specialist or investing in tools and software, the long-term benefits can far outweigh the initial investment.

Compared to other forms of marketing, such as paid advertising or direct mail campaigns, SEO can be a more sustainable and cost-effective way to generate leads and grow your business. Once you start ranking higher in search results, you can continue to attract traffic and generate more business.

Competitive advantage

Finally, good SEO can give you a competitive advantage in your industry. The mortgage business is a highly competitive field, with many companies vying for the same pool of clients.

By investing in SEO, you can differentiate yourself from your competitors and establish your business as an industry leader. When potential clients search for loan-related keywords and phrases, you want your website to appear above your competitors’ websites in the search results.

This can help you attract more traffic and more leads than your competitors, ultimately leading to more business and greater success. With a good SEO strategy, you can stay ahead of the competition and position your company as the go-to choice for potential clients.

With so many choices for prospective clients to choose from, it’s best to think about how you can position yourself or your brokerage front and center, both online and offline. Having a strong social media presence is one thing, but having solid SEO knowledge and an implementation strategy is another necessary step to drive more business.

In today’s market, it will only benefit you to have as many marketing tools in your toolkit as possible. They will help you grow and maintain success over the long term. ●

The post Icing on the Cake appeared first on Scotsman Guide.

Mortgage-specific CRMs

A strong CRM designed specifically for the mortgage sector should be able to store data, seamlessly integrate with other programs and, most importantly, sustain positive client relationships.

Types of CRMs

Major players

Other options

The post Self-Care in the Form of CRMs appeared first on Scotsman Guide.

Engaging videos

Crucial transparency

Relatable content

The post Generation Z Is Eager to Buy Homes Now appeared first on Scotsman Guide.

Manage leverage

In the current fix-and-flip market, knowing the desires of buyers is key, and it pays to stand out. Think about incorporating some of these ideas into your next conversation with one of these borrowers.

Modern appeal

Increased value

The post Build Value for Investor Clients appeared first on Scotsman Guide.

Social media platforms also have proven to be increasingly popular ways to get more business in the door. This is true for commercial mortgage lenders and brokers, large and small. They can reap the benefits of social media if they implement the correct strategies.

Short sound bites

Choose the right site

Utilizing social media to grow a business has never been easier. These sites allow a business to broadcast anything it wants across a variety of platforms.

Position your brand

Poll your clients

The post A Platform With a Purpose appeared first on Scotsman Guide.

Projected timeline

Material shortage

Financial return

The post Remodeling Faces a Bumpy Road appeared first on Scotsman Guide.

Rural America’s moment

Know what to avoid

The post The Fix-and-Flip Trend Goes Rural appeared first on Scotsman Guide.

This means that while a hard money lender may fund a loan largely based on the value of an asset, it is still necessary to pull the borrower’s credit, review their financial history and ask for bank statements to establish cash reserves. Private lenders may offer hard money programs, but they also might specialize in nonprime mortgages or even conventional loans. 

The private lender label is typically applied to smaller-sized companies that don’t offer agency-backed loans through Fannie Mae or Freddie Mac but work with multiple asset classes in both residential and commercial real estate. Additionally, private lenders may have several types of loan programs, ranging from those with lower interest rates that compete with conventional loans to hard money products with high interest rates that are often used for bridge lending scenarios. 

Mortgage brokers and their clients should understand the loan parameters for hard money products. Along with deal structure and pricing, originators also should be aware of the funding process and the importance of the appraisal in closing on time.

Reserved stance

In a hard money lending scenario, the decision to lend is based on the subject property, and this usually results in the lender being conservative with its loan-to-value (LTV) ratio. The lender will offer less leverage on the purchase price, or the “as is” LTV. With a fix-and-flip loan — which is designed to finance property improvements so that the investor can quickly resell for a profit — a hard money lender also will have a conservative ceiling for the loan amount based on the after-repair value (ARV).

In terms of setting expectations for a borrower when applying for a hard money loan, there is a presumption that more cash will be brought to closing than is required for a conventional loan. For example, let’s say that a lender caps the as-is LTV at 80%. After all repairs are done, the lender will likely want to have an LTV of 65% to 70%. Hard money loans are usually underwritten with these coinciding LTV guidelines. These are basics when preparing a client to qualify for a hard money loan, whether it’s for a fix-and-flip project or a long-term purchase of a rental property. 

Once the broker and their borrower have started the funding process, there are items that can still affect the closing timeline, and it is vital to understand them. Many times, borrowers assume that a hard money loan can close quickly simply because of its name. But what they don’t realize is that because hard money lenders base their decisions primarily on property values, the first step in the funding process is to obtain an appraisal or another type of evaluation through a third-party professional.

Although a hard money lender may be able to close much more quickly than a conventional lender, an appraisal may slow down this process in markets where evaluations are taking longer to be completed than their historical norms. If an appraisal takes three to four weeks to get done because the appraisers in a particular market are exceptionally busy, then a borrower cannot expect to close a hard money loan in 10 days. In this case, the borrower and the broker must make sure to submit everything required by the lender to get an appraisal ordered within the first few days of the process. Completing this initial step in timely fashion is crucial for speeding up the closing process. 

If the borrower and broker do not make the appraiser aware of the features that are being added to the home, then this will naturally result in a lower after-repair value.

Detailed proposal

Having discussed borrower expectations and closing timelines, as well as touching a bit on the importance of appraisals, let’s expand upon the appraiser and hard money lender approaches to the after-repair value. For a fix-and-flip borrower to get the best loan terms possible, they and their mortgage broker need to make sure the appraiser is thoroughly aware of the remodeling plan since it will clearly affect the ARV.

For example, if a home flipper is planning to enclose a car port to create a garage, add a master suite, and improve the landscaping and outdoor living space, each of these items would need to be provided to the appraiser in advance of the inspection. If the borrower and broker do not make the appraiser aware of the features that are being added to the home, then this will naturally result in a lower after-repair value.

The borrower’s loan expectations may not be met if an accurate scope of work is not provided, due to the restricted leverage of the ARV. In this case, before an appraisal is ordered, the borrower should meet with their contractor to establish a full budget and detailed project plan. This way, the appraiser has a line-by-line illustration of the plans to remodel and improve the property. 

Additionally, the appraiser can pull nearby sales of comparable properties with similar features. The scope of work can be attached to the appraisal report for lender and borrower reference during the rehabilitation process. If the scope of work is not included with the appraisal order, the appraiser may establish an as-is value of, say, $200,000 and an ARV of $210,000, which is clearly not a good profit margin for a home flip. But if the appraiser has these details prior to visiting the property and is able to see all of the planned improvements, then the ARV may come in at $300,000 — resulting in a much higher and more acceptable yield for the fix-and-flip investor.

● ● ●

The most important difference between hard money lenders and private lenders is that hard money lenders are always nonconventional, and they focus on unique deals that require flexible underwriting while balanced against higher interest rates. The hard money lender typically establishes value and a loan amount by working with a third-party appraisal management company.

When applying for a hard money loan, a mortgage broker should be prepared for the appraisal order by having their client fill out the necessary documents — including the scope of work being done — to obtain the most accurate after-repair value. The ARV is extremely important for establishing a loan amount and helping a client generate profits from their investment property. ●

The post Take a Tutorial on Hard Money Loans appeared first on Scotsman Guide.