Why Over 30% of Mortgages Are Still
Being Refinanced Each Year
By Dave Savage, CEO, Mortgage Coach
A few days after reading the article in the Los Angeles Times about Angelo Mozilo defending hybrid loans and claiming that 30% of all mortgages are still being refinanced annually, I was thinking about how this is possible and all the reasons homeowners are refinancing so often.
I then realized it was my responsibility to validate these numbers and provide a simple way of helping originators understand and believe them, so they will put more focus and effort on not letting these opportunities slip through their fingers.
First, there are three broad reasons why homeowners refinance their mortgages:
1. Wants;
2. Needs; and
3. The changing marketplace.
Almost every reason why a homeowner will actually refinance their mortgage fits into one of these categories — categories that constantly change, whether we realize it or not.
Just the other day, I had a conversation with a friend who reminded me that, when he and his wife bought their home three years ago, it was their dream home, and they were absolutely certain it would continue to meet their needs and they would live there for the rest of their lives. Today, they’ve outgrown that home and are considering moving—a situation they never thought would happen.
My point: Our wants and needs are guaranteed to change — most likely at least every three years. Meanwhile, the marketplace changes daily. So it’s not surprising that homeowners refinance so often. What is surprising to me, however, is just how few mortgage originators understand this and take consistent action to invest in their past clients and stop missing out on the 30% of past clients who are refinancing annually.
Getting new business from existing clients is the biggest opportunity and the easiest to harvest…it just requires loan officers to start managing the mortgages of their past clients by sending a regular RateWatch Report and by conducting an Annual Equity Review. These are simple and easy things to do, but often, the simplest and easiest things to do get put aside and go undone.
The point of this article is to help LOs focus and execute on one of today’s and tomorrow’s biggest and most obvious opportunities — maximizing existing mortgages under management.
I recommend that you read this article two or three times and then read it again monthly until you are executing the core services of a mortgage "coach."