Finding A Competitive Advantage in Mortgage

By | January 19, 2022

PMI Rate Pro
Feature Article
Special to MortgageSpeak
By Nomi Smith






Most of the experts observing the home finance industry expect 2022 to be a very different year from the two that preceded it. The historic loan volume will fall off and refinance business will fall back below 25% of lender volume. In fact, the Mortgage Bankers Association announced in October that refi volume was already at 25%.

The mortgage business is changing…and fast.

Lenders that want to stay in the business next year, to say nothing of growing their businesses, must find a competitive advantage that will set them apart from their competitors.

For many reasons, we believe the differentiator will be borrower trust, and it will be earned by lenders that provide better information to the borrowers that apply for a loan with them. It can be the competitive advantage lenders need now.

The incredible power of borrower trust

Trust is a funny thing. It’s the faith a person has that another person has their best interests at heart. It’s been very difficult to win in the financial services business because most consumers don’t believe traditional banks care very much about them.

When your customer’s trust you, you’ll win more of their business, but you will also win their referrals, which can have an exponential impact on your business.

In a purchase money business, like the one we’re moving into now, the impact is even more pronounced. If you win the trust of the borrower, they’ll give a glowing report to their real estate agent, who will bring you even more business.

So, how can mortgage lenders win borrower trust?

You win borrower trust with better information that results in them getting a better deal. One of the easiest ways to do this is to save them money on pass-through fees they have to pay. While it’s nice to offer them a one-time savings on an appraisal or origination fee, the real power comes in saving them money every month.

You can do that by giving them a better price with PMI. Of the 70% or so of all homebuyers that will require mortgage financing to buy a home, the National Association of Realtors estimates that 52% will put down less than 20% on their home purchase. This means they will need private mortgage insurance (PMI) and it opens the door for the LO to build trust.

This is an incredible opportunity. But not necessarily an easy one for most loan officers to take advantage of.

Up until 2018, PMI pricing was static between all of the MI providers. But then that changed and now these companies use risk-based pricing. It’s much more difficult to find the lowest price now and no loan officer has the time to do the research on the best available rate from all six national PMI providers.

Many lenders are only credentialed with just a few of the MI providers, which can only give them a partial view into pricing. Adding more is problematic and exposes lenders to the risk that their time and effort will be wasted if a new PMI provider fails out of the business.

Fortunately, lenders have another option. With the right Risk Allocation tool, lenders can easily control how they delegate risks between the various MI companies and have complete transparency into the various companies’ pricing strategies.

The tool you need now to win more borrower trust

Lenders who can get borrowers the lowest cost PMI are more likely to have lower overall pricing. That will make them attractive to borrowers, but that’s only one of the benefits we’ll talk about below.

Offering lower prices is always a win. Lenders who can get borrowers the lowest cost PMI are more likely to have lower overall pricing. That will make them attractive to borrowers, but the real benefit is that the borrower will know that the LO actually cared enough to get them the best deal. That wins trust.

As former mortgage loans officers, we realized that saving borrowers money on PMI was a game changer because it could put us into the “most trusted” position among all of the lenders the consumer would seek information from before taking out a new loan.

Unfortunately, we didn’t have time to do the research beyond getting a couple of quotes. But there are six major PMI providers in the country. Getting our borrower a better quote than any one of them did not give our borrowers confidence that we had found them the best price.

The only way to show the borrower that you have their best interest at heart was to come back to them with prices from every PMI provider. A tool to make that easy didn’t exist, so we built it.

Today, loan officers who use PMIRatePro can fill out a very simple form and within 6 seconds get a complete view of all of the PMI options available to their borrowers.

Our platform returns Monthly, Single, Split & Lender Paid PMI quotes from all 6 national PMI providers. It’s priced so affordably that winning 1 extra loan will pay for the platform for 8 years of use.

On average, PMIRatePro saves users 4+ hours of research each month, while it makes it easy to present to borrowers the results. Typically, users are able to save their borrowers $45 per month or $4,000 on single payment PMI. The results in terms of increased borrower trust are impressive. This relates directly to increased business and better pull-through as our users see an increased conversion rate of 5%.

Best of all PMIRatePro is the only system available today that is platform agnostic. It can be seamlessly integrated into any mortgage technology platform. We manage MI integrations, risk allocation, standards, documentation and much more so LOs can focus on building and maintaining their relationships with borrowers and business referral partners.

When LOs offer a better deal to borrowers and can demonstrate that they are going the extra mile to make sure it truly is the best deal, they win borrower trust and more business. But leaders won’t stop there.

Just quoting a mortgage payment with monthly PMI is a good way to lose borrowers before they close, especially in today’s market. Building trust requires the LO to demonstrate a willingness to help the borrower get the deal that’s best for them. With PMI Rate Pro, LOs are empowered to discuss different PMI strategies with their borrowers, looking at their debt holistically.

A case in point: NBKC Bank

Community banks are being redefined. They’re competing in a new digital age against institutions that operate very differently. This has opened a pandora’s box of opportunity into reimagining what this new world for community banks will be. One thing is certain — technology is at the forefront of this movement.

Smart community banks see this as a way to better serve their clients; after all, community banking is all about meeting the client where they live. Nowadays that place just happens to be online.

Case Overview

NBKC bank started online lending before it was cool. They understood that traditional home buyer methods weren’t meeting the needs of their clients. However, they didn’t lose their personal touch as they operate inside the digital ether. They are firm believers in the idea of utilizing technology to bolster human connections and a community feel.

Their dedication to efficient technology solutions coupled with unparalleled customer service allows them to stand out among the crowd, as NerdWallet recognized them as being the best online mortgage lender in 2020.

The Challenge

Even while utilizing the best technology available, loan officers still had gaps in the mortgage process. The most notable of these was the inability to efficiently quote all Private Mortgage Insurance (PMI) options. PMI is needed when a homebuyer does not put a 20% down payment on their mortgage. With today’s borrowers, PMI has become the status quo.

There are a multitude of options available for PMI, yet there is no way to quickly compare rates and options.

The Solution

With nbkc’s focus on always efficiently serving their clients to the best of their abilities, they knew there had to be a better way to source all PMI quotes efficiently. After turning to PMI Rate Pro, nbkc loan officers were able to shop all rates from all national insurance carriers instantly.

Ultimately, this saved nbkc’s loan officers valuable time and, most importantly, allowed them to offer the lowest rates to their clients and save them money.

Specific Results

The management team at nbkc found out that building consumer loyalty in the mortgage industry is actually possible, but only if you give consumers what they want: a trusted advisor who has their best interests at heart.

The results speak for themselves:

  • Borrowers saved an average of $5,000 over the life of their loan
  • Loan officers saved 5,033 hours while sourcing PMI quotes
  • Number of unique quotes run on the platform: 10,067
  • Total quotes on the platform: 302,010
  • Total monthly homebuyer savings: $385,416.27

Homebuyers want more options and offering different PMI strategies gives them what they want and wins trust. Loan officers who use PMI Rate Pro have helped their borrowers put less down on a mortgage with an interest rate of less than 4% (perhaps much less) so they can pay off credit cards that are costing them 29%. Now that’s how to win more mortgage business.

If you want the complete story about how to win borrower trust and earn more mortgage business in 2022, download the complete White Paper on our website now. Then, call us to start using PMIRatePro for your borrowers.


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