We all know that cash-out opportunities allow homeowners to convert the equity they have into dollars, while they continue to pay off their mortgage. Camber Marketing Group can help you with direct marketing campaigns designed to let customers and potential clients know about leveraging cash-out opportunities.
But for lenders, they can also be a way to convert the personal equity you have built through your professional relationship into future opportunities for engagement, retention, referral, and so much more.
Consider this: in 2021, lenders tapped into approximately $1.2 trillion in cash-out refinances, a 20 percent increase from the year before, and hitting a high that hadn’t been seen since 2005.
Still, according to data culled by analytics firm Black Knight, recapture rates from that same period remained shockingly low – with only 21% of borrowers remaining true to their original lender.
Why? Some fingers pointed to more efforts being poured into attracting new blood than fostering a business relationship with existing clients, even when the cost of acquisition is approximately five times more than the cost of retention.
And while mortgage rates almost doubled beginning in 2022, with FHFA boosting upfront fees for most cash-out loans, rate lock activity turned a corner once again earlier this year, with cash-out refis rising 25% in January.
Luckily, there are ways that loan officers can up their retention game considerably, all while helping their customers refinance. After all, the ins and outs of cash-out opportunities may be confusing for your borrowers. By helping them navigate the financing process you may be able to foster long-term relationships simultaneously. Here are just four ways to make it happen:
- Teach: It’s more than likely that borrowers, particularly young families, may not understand the requirements for cash-out financing, how much they can borrow, or the potential risks associated with this kind of loan. As a mortgage lender it is important to provide borrowers with clear and concise information on the cash-out financing process, including an overview of the application process, what documents they need to provide, and the timeframe for approval.
It’s also critical that lenders educate borrowers on the different types of cash-out loans available. Borrowers may be eligible for an FHA cash-out refinance or a conventional cash-out refinance. Each comes with its own set of eligibility requirements and terms. By explaining the pros and cons of each, you help borrowers make the best decision for their unique financial situation.
- Assess: If a borrower is considering cash-out opportunities for home improvements, help them estimate the costs of the renovations and determine if the increased monthly mortgage payment will fit within their budget. When you collaborate with borrowers and help them see their financial situation in a new light, you not only ensure that informed decisions are made – which helps both parties in the long run – but you begin to build, or build upon, a trusting professional relationship that will serve you well in the decades to come.
- Support: Even after approval is granted, you should continue to provide support throughout the life of the loan. Keep in touch with your customers via direct mail marketing. Help them understand their monthly mortgage statement and provide them with a lifeline they can access to ask questions about loan terms or receive advice on how to manage their monthly payments. Building a relationship with borrowers and providing ongoing support ensures a successful experience with your company that is worth telling their friends and family about.
- Monitor: Keep monitoring interest rates and the availability of funds. If rates drop, reach out to eligible borrowers immediately and let them know about new opportunities to refinance cash-out loans at a lower rate. Camber Marketing Group can help you design a campaign to reach borrowers quickly when they need you most.
By working closely with your borrowers, lenders help ensure that they make informed decisions about their cash-out financing options and have nothing but positive things to say about their loans.
Camber Marketing Group will help you launch a marketing campaign targeted at eager groups of credit-qualified, equity-rich homeowners. Reach out to us today to find out more about options and to get started.