Rethink How to Educate Borrowers on their Loan Options

This week, Mike Faraci provides 15 ideas to educate and attract future clients to your business and Brian Vieaux provides advice for loan officers to offer fair and honest loan product recommendations

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Mortgage Content That Works: Simplify > Educate > Converse > Convert

Mike Faraci, Founder, Red Button Media

Creating compelling educational content in the mortgage industry requires finesse, especially when tackling complex topics for an audience unfamiliar with the intricacies of mortgage financing. If you’re seeking to educate and attract future clients, here are some ways to do that effectively, through your content.

1. Understanding Your Audience's Mental State

• Recognize the mental space of your audience. Many individuals encountering your content may lack a foundational understanding of mortgages due to gaps in financial education.
• Understand that viewers consuming content on social media platforms often operate in a state of reduced mental capacity, seeking entertainment or distraction from daily routines.
• Tailor your content to simplify complex mortgage concepts, resonating with viewers who may not be operating at maximum mental capacity while scrolling through their feeds.

2. Avoid Math Overload

• Steer clear of intricate mathematical explanations involving percentages and dollar amounts, which can overwhelm and deter viewers.
• Instead of diving into DTI ratios and specific financial thresholds, convey eligibility criteria in relatable terms, focusing on spending habits rather than numerical specifics.
• Frame qualification requirements in straightforward language, ensuring viewers grasp the essentials without the need for extensive mathematical comprehension.

Example - The best way I’ve ever heard DTI explained:

“Spend less than $43 of every $100 pre-tax dollars on housing and debt payments and you’ll qualify!”

3. Focus on the Client Experience

• Shift the focus from technical program details to the experiential benefits for clients, illustrating how specific programs can alleviate common housing-related challenges.
• Frame your content to center around the viewer's journey and aspirations, portraying them as the protagonist navigating the path to homeownership.
• While your content lays the groundwork, save in-depth discussions for one-on-one conversations, where you can address specific questions and concerns.

4. Dispel Mortgage Misconceptions

• Combat prevalent misconceptions surrounding mortgage insurance and down payment requirements by providing accurate information and clarifications.
• Showcase the advantages of utilizing mortgage insurance as a tool to expedite the homebuying process and build long-term equity.
• Offer tangible examples and scenarios to illustrate the financial implications of different homebuying strategies, empowering viewers to make informed decisions.

5. Educating on Mortgage Processes

• Break down intricate mortgage processes, such as pre-qualification versus pre-approval, into digestible explanations accessible to viewers with varying levels of expertise.
• Focus on imparting essential knowledge that equips viewers with the confidence to engage with mortgage professionals and navigate the homebuying process effectively.
• Educate viewers on critical aspects of mortgage shopping, such as obtaining multiple quotes and negotiating terms, to empower them to make informed financial decisions.

Effective mortgage content creation hinges on the ability to simplify complex concepts, engage viewers effectively, and provide valuable insights tailored to their needs.

By adopting a client-centric approach and leveraging the power of video content, mortgage professionals can establish trust, build credibility, and ultimately foster meaningful connections that turn into leads, loans, and referrals.

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Advice for Loan Officers to Offer Fair and Honest Loan Product Recommendations

Brian Vieaux, President & COO, FinLocker

Consumers at all stages of the homebuying and homeownership process have a baseline expectation of their loan officer to be an expert in structuring a loan by coordinating the information they provide and matching that to an appropriate loan product. However, the responsibility doesn't end with merely presenting a loan solution; it extends to providing comprehensive education and offering transparent guidance to empower borrowers to make informed decisions.

A lot of loan officers, though, aren't taking the time to truly educate borrowers about all their options. What I see happen too often is that loan officers present what they perceive as the best option for a consumer's situation—and that's the only option they present.

I recommend, especially in light of some of the news that's hit the industry of late, that loan officers take the time to understand each borrower's specific financial scenario and structure multiple product options tailored to each borrower's unique circumstances. For instance, comparing a 30-year fixed-rate loan versus a 15-year fixed-rate loan and showing the consumer not just the difference in the monthly payment but also how the term difference accelerates their amortization of that particular loan. Similarly, comparing a fixed rate loan with an adjustable rate mortgage based on a conversation with the consumer who only plans to live in the home for three or no more than five years. By presenting a comprehensive view of both traditional and non-QM loan products, loan officers can empower their borrowers to make informed decisions.

The importance of education is not just financial readiness but also taking the time to provide each consumer with a specific personal financial scenario involving homeownership and presenting different loan product options that meet their financial circumstances. A good example of how to represent those options is using a tool like the Total Cost Analysis that Mortgage Coach creates for its loan officers. This tool makes it easy to tell the story of one loan program versus another, so it's easier for the consumer to make an educated decision.?

Ultimately, the role of a loan officer extends beyond facilitating a transaction; it encompasses guiding borrowers through one of life's most significant financial decisions. By embracing a commitment to fairness, transparency, and education, loan officers can fulfill their duty to homebuyers and homeowners. Through collaborative exploration of loan options and transparent communication, loan officers can cultivate trust and foster informed decision-making among borrowers, laying the foundation for long-term financial stability and successful homeownership.