Finance, Loan, Debt and Credit.

April 11, 2015

Mortgage Lead Generation Business Model Exposed: How Mortgage Refinancing Portals Work?

During the last weeks, I’ve been interviewing with a company, a new Internet Start-Up in Barcelona based on a Mortgage Lead Generation business model. In my research, I found some interesting things about this market that I wanted to share in this article.

The mortgage refinancing business model

First of all, I just want to clarify how this business model works. This model consists mainly on users filling their personal and financial data into a mortgage refinancing portal. Then the portal commits to send the user personalized offers (real offers from brokers or banks) to improve the actual conditions of the user’s mortgage. This service is usually free for the end user and the value created is clear: It basically saves you a lot of time in comparing different offers from different banks that are applicable to your specific financial situation. On the other hand, what these portals get from the end user is valuable information for banks/mortgage brokers: They have a potential customer interested in refinancing its mortgage, all his/her relevant financial data and the permission to send this information to banks/brokers to obtain the best possible conditions. This information is highly valuable for these institutions…. But how valuable?? Lets just make some rough calculations:

Given that the average commission on closing a mortgage deal is around 1-3% on let’s say an average home value of (let’s say) US$ 250.000, It means that what a broker earns on closing a mortgage deal is around US$ 2.500 – 7.500. Of course not all the leads sent to a broker end up in a refinanced mortgage, but let’s just assume that 10% – 20% of qualified leads (meaning people interesting in refinancing its mortgage, that took the time to fill many forms and questionnaires with personal information) end up in signing a new deal. This means that the maximum value of a “lead” for a broker (the same goes for a bank) would be around US$ 250 – 1500 (10% – 20% x US$ 2500 – 7.500). Anything below this, means margin for the broker. Depending on each broker’s ability to close deals, the quality of the leads, competition and other factors, each broker would be willing to pay a % of these maximum values per lead.

Two of the first and most succesful companies within this industry are lendingtree.com and lowermybills.com. For more information about Lowermybills, you can read the LowerMyBills Case Study.

Expensive Keywords

The first thing that caught my attention was that some keywords in this industry, keywords like “Mortgage refinance”, “Credit remortgages” or “Refinancing mortgage” are amongst the highest paying keywords in Google’s Advertising Network. What this suggest is that this market has become so competitive that has drove the price to one of the highest paid keywords in Internet advertising. It also suggests that at this superhigh price (around US$ 40 per click) the companies dedicated to mortgage lead generation still make money. Therefore, either they have an amazing conversion rate or they earn really a lot for each lead they generate, either for a mortgage broker or directly to the banks.

A simple calculation would be:

If the conversion rate of these keywords is, let’s say 10% (assuming a very high rate), it means that any company in this industry should at least make US$ 400 (US$ 40 / 10% = US$ 400) to break even… This figure is consistent with the ones obtained in the firs part of the article, where I got a possible value range per lead that went from US$ 250 – 1.500.

Opportunity for “arbitrage”

Assuming that the U.S. Mortgage refinancing market is already a mature market (and it’s safe to assume that after the mortgage mayhem of the last years), another important point would be that there is an opportunity for arbitrage (and an opportunity to make a lot of money) in any market where the PPC’s of these keywords is still very low. For example, if you get the estimated cost for the keyword “Hipoteca” (Mortgage in Spanish) the CPC is still around 3€ (roughly US$ 5). If we assume that when the market for mortgage lead generation matures the CPC will be close to what it is in the US (around US$40), it means that someone, probably the first ones in the market that make it reasonably well, will make a lot of money. The same goes for any other market where the CPC of the main keywords is still very low.

Maybe Offline advertising is the answer in the long run

As a final thought, with CPC’s at US$ 40, thousands of different sites competing in a market with not much differentiation and a huge market base of potential customers (estimated at around 45 million homes), the key elements are in place to switch at least an important part of the marketing budget to regular offline advertising. When the PPC market gets that competitive, TV or radio campaigns could lead to a much lower cost per conversion.

View the full article at my blog MBA Internet Marketing Manager

May 30, 2013

Credit Card Debt Settlement Exposed – What A Debt Settlement Company Should Tell You

Credit card debt is a plague that many people have fallen into. Most are able to make their monthly minimum payments, but are unable to effectively pay off their debt in a matter of years. Because of this, many companies are new capitalizing on debt solutions.

These companies promise to get you out of debt fast and with as little money owed as possible. For some companies, this is true and they are legitimate. For other companies, this not true and they are scammers. Here are some of the things that good companies will tell you when you contact them.

Aurora Lillo Editor of the “Credit Card Debt Settlement” website — http://www.CreditCardDebtSettlementUsa.com — pointed out;

“…A great debt settlement corporation will begin by telling you what their credentials are. They should always tell you how they are affiliated with educational requirements or their affiliation with certain credit card lenders. If a settlement organization will not offer you their credentials, hang the phone up immediately. Legitimate settlement groups will be able to tell you their training and qualifications and ask you if you would like any proof. If they offer it you, they are probably not a scam…”

Another thing that these groups should be able to tell you is exactly how much you are going to need to be out of debt. For instance, if you owe five thousand dollars to a credit card lender and your settlement agents tell you that you need twenty five hundred to settle right then, they are definitely legitimate. Your counselors should always be a step ahead of you. If you have a question that they can’t answer within thirty minutes, go on to another group.

If your settlement agency sets you up with a payment plan, there are two things they should be able to tell you. They should be able to give you a specific interest rate that you are going to be paying and they should be able to give you a specific time frame for the month that you will be debt free. If they can’t give you either of these then they are just looking to make money.

“…Be sure to choose a settlement group that is going to represent you to the fullest with your creditor. Don’t go with one that has no credentials or can’t give you a specific time frame to when you’re going to be out of debt. Always check user reviews and online forums before you ever sign with anybody…” added A. Lillo.

Further Information By Visiting; http://www.CreditCardDebtSettlementUsa.com

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