How to Create a Mortgage Loan Officer Business Plan, Step By Step
When people ask you how much loan officers make, do you have a hard time coming up with a succinct answer?
Don't worry! It just means you know your business. There are probably as many total compensation numbers in mortgage lending as there are loan officers.
According to Payscale, the average mortgage loan officer earns about $47,500 per year in salary and $36,500 in bonuses and commissions. But the outlying data is what shows you just how varied compensation can be from person to person.
The same Payscale report shows that the base salary of a mortgage loan officer ranges from just above $29,100 to almost $84,000. And that's not all – recent data shows that the top earners are bringing in more than $131,000 from commissions alone.
To get to that level, you have to know your industry. You have to understand what your customers want, of course, but first and foremost you need to know exactly how you're going to build your business. And that means developing a solid business plan.
Creating a Loan Officer Business Plan in Five Steps
Without a business plan, you don't know where you're going or how you're going to get there. In such a competitive industry, that’s like running a race with a blindfold on – no matter how fast you run, someone who can see is going to get to the finish line faster. Here's how to give yourself that edge.
1. Analyze your market.
You can't know how to develop your business until you know what the market needs. Before you even start writing your business plan, take some time to research what's going on in your market. For the area you serve, find out:
- The average value of homes
- Median household income
- Home purchase and sales trends
- Property valuation forecasts
- Homeownership rates
- Housing vacancies
This information will help you to understand who you're serving and what they need. Your business plan will be different if your area has a median income of $50,000 than if your average buyer is earning six figures a year. Your sales goals may change if you learn that homeownership rates in your area are declining.
Once you have as much information as you can gather, you can start to develop actionable objectives.
2. State your business objectives and goals.
The real estate market is notoriously uncertain. Pair that with an “it depends” business strategy and you'll have a difficult time creating a mortgage loan officer business plan.
Look at the information you have and consider what's realistic for your market. Where do you want your revenue levels to be in five years? In one year? Take a look at some examples of mortgage business plans to get an idea of the objectives that others in your field are pursuing.
Next, decide if you want to add any milestones or short-term goals. For example, if you plan to add a second office within five years, will you need to hit a certain revenue level by the three-year mark?
3. Develop a marketing and public relations strategy.
Identify the tools that you'll use to pursue your goals. Make sure to diversify and take advantage of digital marketing strategies as well as good old-fashioned networking.
Schedule your blog posts, then go out to a Chamber of Commerce event. Buy ad space on a real estate website, but don't forget to talk to your neighbors and find out who might be buying or selling.
It's particularly important to keep your digital content up to date. Networking is networking in any age, but online trends change quickly. In 2019, for example:
- Infographics offer a 40 percent engagement rate
- Facebook Live videos have twice the engagement of non-live options
- The ROI of emailing relevant content is approximately $38 for every dollar spent
- Promoted social media ads are expected to generate $17 billion
Just make sure that you create time in your day to get those messages and posts out into the world!
4. Develop a referral network.
Your networking strategy should involve fellow professionals as well as people in the community. Join professional organizations, like the National Association of Mortgage Brokers or the Mortgage Bankers Association.
Make connections with people who aren't directly involved in mortgage lending but who work with people who need loans. Reach out to local:
- Real estate attorneys
- Listing agents
Make sure that your referral strategy includes organizations that you can send clients to as well as vice versa. For example, at some point, you will probably have a client that needs a second mortgage or home equity line of credit but doesn't qualify. More than 20 percent of people seeking this kind of funding can't get approved.
A Unique Referral Opportunity
Through its Sell and Stay program, EasyKnock specifically targets homeowners who have trouble securing loans. Sell and Stay allows a client to sell their home to EasyKnock and remain in place as a tenant, paying rent until they are ready to buy the home back or move.
When you send clients to EasyKnock via the company's referral program, you get a commission for every person who signs a purchase and leaseback agreement. When the client gets access to their equity, you get a payout as well. Everyone benefits and you have a relieved customer who will probably refer to you in the future.
5. Keep tracking your progress!
Your objectives should be specific enough that you can track your progress as you go. The best way to do this is with key performance indicators, or KPIs, which are data-based metrics of a business's momentum.
To help you evaluate the success of your business plans, your KPIs need to be:
- Based on numerical data
- Presented in the context of performance goals
- Relevant to current company processes
- Useable to drive change as necessary
KPIs that are particularly useful to loan officers include:
- Application conversion rate: the ratio of funded loans to applications in a certain time frame
- Average origination value per loan: revenue earned from each loan
- Cost per loan originated: how much you spend on average to secure each loan agreement
Get on Track Today
If you don't know where you're headed, how will you know when you're there? To know your destination as well as your path, you need a solid business plan with specific and actionable steps.
Invest some time in developing one today. You'll thank yourself when you reach your first goal!