The surprisingly delightful upside of Draw Mortgages
Draw mortgages often take a lot of time to package and many of us avoid them since we believe the payoff is the same as more efficient purchases and refinances. In these times of competing market share, why discount a market segment who has a significantly greater need for our help?
Draws are an excellent way to diversify your offerings and build your customer base. Providing the expertise and options/solutions for customers to build their home is a solid foundation for a long-term relationship.
The most common reasons for avoiding draw mortgages are that they take a lot of time to put together, the fee incentives are no different and the lender keeps the customer.
Here’s some considerations that may shed a different light on these:
1. It takes a lot of time and effort
It’s true, Draws are more complicated than regular deals. However, if you use a lender who has years of experience with Draws, they will guide you through the process. The more you learn about the packaging process, the more efficient you’ll become at putting these deals together. As a draw expert, your role will be to advise, inform and package the initial deal, while the responsibility for documentation and meeting ongoing requirement rests with your customers.
2. It’s a lot of work for the same payoff
Fees and pay structure varies by lender. Shop around to see if they pay a separate finder’s fees for the draw (construction) term and end term (when construction is done and it becomes a standard mortgage). If so, you’ll get paid twice!
3. Once the build is complete, I relinquish control of my customer to the lender
This goes hand-in-hand with point 2. Unless the lender allows the customer to switch lenders for the end term, this is an opportunity for you maintain control and even strengthen the relationship by finding them the best deal on the market.
Bridgewater Bank has an insured Draw solution that addresses these reservations because we created our Gateway Draw Partner Program with brokers in mind. Here are some features that set it apart:
While most lenders focus on residential home builders or contractors, BwB understands there are DIY people out there who want to build their own homes and deserve financing to do so.
Customer control & your opportunity
We give you the freedom to switch to another lender without penalty upon completion of the build. We understand there may be better terms for your client/customer offered at this time, so we don’t want to tie you down.
What’s more, if you do switch upon completion, we’ll compensate you for your hard work in the draw phase:
- For mortgages under $300,000 you will earn a finder’s fee of $250
- For mortgages $300,000 and more, you will earn a finder’s fee of $500
So you get control of your customer, compensation for the work you did during the draw term and compensation from another lender if you switch at the end term.
Support & Service
Our underwriters have been doing draw mortgages for years. Their goal is to help you and your customer build their home. Their understanding of insurers’ requirements and paperwork make them an invaluable tool if you don’t have a lot of experience in this area. They will guide you through the process, making it as painless as possible.
Do you have any suggestions on how to grow draw business? We’d like to hear them in the comments.