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Industry Insights: Four Ways to Capture Mortgage Business through Pre-Qualifications

October 27, 2016

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Within six months of pre-qualifying with Alterra Home Loans, a Freddie Mac Seller/Servicer based in Las Vegas, NV, estimates that some 70 percent of prospective homeowners will become one of its home loan customers.

Alterra's experience is not uncommon: Many mortgage customers first establish a relationship with their lender through a pre-qualification tool or process. It makes sense, then, that local lenders are finding ways to capture and leverage pre-qualifications to grow their business.

Here are four tactics that local lenders often use to compete with national lenders for pre-qualifications:

  1. Offer online pre-qualification.

    Though a primary strategy for pulling in pre-qualifications is to differentiate from the big mortgage lenders, which have significant online presence, online pre-qualification is nevertheless an essential tool of any program. Millennials in particular may prefer the convenience and initial anonymity of researching mortgages online. Yet when it comes time to apply for a mortgage, some lenders have observed that many of these same individuals seek the comfort and familiarity gained by sitting across the desk from a local lending professional.

  2. Keep the value of pre-qualifications in front of your loan officers.

    Miguel Narvaez, Chief Production Officer at Alterra Home Loans, says that two of the keys to increasing their pre-qualifications are "bringing new products for our LOs to better serve the community, and constant training and coaching of all of our LOs." Regular training and coaching may help keep LOs attuned to opportunities for more business, generated by using pre-qualification as an entry point for new mortgage customers.

  3. Reach out to local real estate professionals.

    Lenders should make sure that their pre-qualification services are known to local real estate professionals. Their suggestions:

    • Attend, or perhaps speak at, real estate association meetings.
    • Cultivate relationships with local real estate offices by regularly communicating with them:
      • Keep them updated on new lending regulations, practices, products and resources.
      • Attend community events and maintain social connections with them.
    • Partner with real estate agents in putting on community events.

    Though not always the case, community lenders often employ more long-time community residents than do national lender branches. This ongoing community presence helps these lenders maintain ongoing relationships with local real estate professionals.

  4. Be sure current customers are aware of your pre-qualification offering.

    If your business includes services other than mortgage loans, keeping them informed about your free, convenient pre-qualification service may help to win their business when they're looking to purchase a home.

    While pre-qualification may expand your list of prospective mortgage customers, it also enables you to assist prospects who are not quite mortgage-ready to improve their financial profile. The lender can offer educational tools and services to such consumers.

    "We put a lot of thought into how we handle pre-quals," notes Narvaez, "and our culture allows for great communication with our underwriters, which can help us with even the most difficult pre-quals." By helping their pre-qualification customers become more informed and better prepared for the mortgage application process, Alterra has seen an impressive 92 percent of their submitted loan applications result in closed loans.

    Pre-qualification business, then, not only helps local lenders to thrive; it helps community members achieve their dream of homeownership.

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