A relationship-building home equity strategy

Meaningful relationships are the cornerstone of a successful lending business. Unfortunately, short of inviting them out for a meal, deepening those relationships can be difficult. Having an effective home equity strategy that helps you connect is key.

Over the years, we’ve learned a lot from our lending customers. What do the most successful lenders do? Well, a lot. But one shared trait is a commitment to education that identifies consumer goals and links them to a lending product while avoiding confusing jargon.

In short, they talk about the things consumers love in a language consumers understand.

These days, home equity loans and lines of credit are a particularly powerful product group to bring up. It’s fair to say that not a lot of people understand what home equity really is. And as a result, they don’t understand the opportunities it offers them.

Julian Hebron from the Basis Point helped us outline four customer goals that link well with home equity and can help drive a successful lending business by deepening relationships. Your customers will appreciate learning about responsible uses of equity, how to leverage home equity as a sound financial strategy, and how easy the home equity process can be.

Your relationship-building home equity strategy

1. Home equity is for home improvement
American homes are not ATMs. Educate clients about responsible uses for home equity. Making home improvements may be top on the “responsible use” list.

Conversation starter: “Make Building That New Deck Less Taxing.”

2. Home equity is for debt consolidation
Help your clients understand that an equally smart use for home equity is debt consolidation.

Conversation starter: “Put Your Credit Card Debt on the House.”

3. Home equity is for retirement planning
Educate customers about net worth and start valuable retirement-planning conversations. Engaging with customers about their strong equity position naturally invites other discussions about their overall plans, their current and future life events, and their ongoing financial needs. These conversations will allow you to highlight consumer-friendly rates and monthly payment comparisons, teaching customers how to blend home equity with their budget.

Conversation starter: “Looking For Your Nest Egg? You May Already Live There”

4. Home equity strategy is for building stronger relationships
A key marketing message for your customers to hear? We’re doing this your way. No matter what dream your customers fulfill with their home equity, they deserve to progress through the application on their terms. They also deserve to have immediate access to product education and options, including rates and terms. If such information isn’t available online, they deserve to have access to you — that fountain of knowledge.

With Blend’s Omnichannel features, you can offer a seamless and consistent experience for your customers, no matter what communication channel they prefer. When you provide meaningful guidance, support, and education, you’ll nurture, grow, and retain your customer relationships. Keep these home equity talking points in mind to elevate your client connection.

Conversation starter: “You’re Busy. We Get It. Let’s Do This on Your Terms.”

Before you go: A home-equity refresher

Here are some key home-equity facts to help you kick-start your home equity strategy and start customer conversations.

      • HELOC rates are about three times cheaper than credit card rates of 14-19%
      • Today, Prime is 5.5% and most HELOC customers have 0-1% margin
      • HELOC vs. credit-card-rate comparison holds over market cycles because credit cards also peg to Prime
      • HELOCs have fixed-rate advance options for big ticket items like college tuition
      • Even fixed-rate advances have lower rates than credit cards and personal loans
      • If home equity funds are used for home improvement, interest can be tax deductible
      • HELOCs have the same use-as-you-go function and convenience of credit cards
      • Customers access HELOCs using a credit card

Learn more about Blend’s Home Equity software and how it can accelerate access to home equity.

This blog post is adapted from “How to build home equity into your marketing mix.” Download it for a more data-focused view on developing an effective home equity strategy.