Residential Magazine

Know Your Closing Ratios

Tracking the math on loan production can make you a better originator

By Michael Ninomiya

Every loan originator is a sales person. In the world of sales, leads are one of the most important tools for becoming a top producer. Knowing lead and closing ratios is what separates top performers from those who fall short of that mark. 

If you struggle with consistency and wonder in amazement at the top producers in your office who always seem to hit their numbers, then tracking your leads and knowing your ratios is vital to taking the next step. Top performers know their ratios and how many contacts they need to make every day to get to their desired income levels. An essential part of being a top producer is your ability to effectively track your leads and to follow up to make the right adjustments.

If you do not currently have a system in place that will help you track leads, then you will have a difficult time staying consistent and find it much harder to hit your income goals every month. Lead tracking and knowing your closing ratios give you detailed feedback on why you are missing your numbers and what you need to work on to improve.

Develop a system

Several lead-tracking systems are available on the market, but they are not cheap, and if you are not committed or are new to tracking your leads, they might not be worth the investment initially. You can easily start tracking your leads on an Excel spreadsheet, however.

Start by listing every lead you receive in your lead-tracking spreadsheet, including what referral source it came from and all the lead information. Then color code the leads to determine if they are hot leads, warm or cold. Triaging these leads is important, so referencing your lead list once a day needs to be a habit you develop. The ratios to track include the following:

  • Lead-to-application ratio;
  • Application-to-real-deal (any loan submitted to processing) ratio; and 
  • Real-deal-to-CTC (clear-to-close) ratio.

Knowing your ratios is vital to maintaining consistency. 

Work backward

Successful managers will discuss ratios with their team members. Often times they will work backward to achieve the number of leads needed, starting with funded loans, then loan applications and then onto leads. 

If a mortgage originator is funding two loans per month, and the goal is to get to four loans a month, first review the pipeline for the number of loan applications written per month. If an originator took seven loan applications last month and closed two loans for example, that gives the originator a 28 percent loan-application-to-real-deal ratio.

“ If you hit the lead-count goal, but not the loan-funding goal, then it’s time to look at the quality of leads. ” 

That takes us to leads. Anytime an originator gets a lead from a Realtor, business partner, the internet, networking event or other sources, it should be noted and counted. If an originator received 18 leads last month and wrote seven applications, that originator has a 38 percent lead-to-application ratio. Using these numbers, mortgage originators can then plot what they need to do to increase their business. We already know from this example that the originator needs 18 leads per month to hit two loans closed. If the originator increased those leads to 36, it should double the ensuing income. 

By tracking leads, you also will be able to determine the quality of the leads. This will help filter out the lead sources that are wasting your time and help you locate better lead sources. By filtering out bad lead sources, it will help improve your closing ratios.

Tracking your leads also can help in pinpointing loan amounts and the Realtors who deliver higher loan-amount leads. By combining quality of leads and higher loan amounts, you can increase business significantly. Without tracking leads, however, you will not have an accurate depiction of lead flow and quality of leads. Loan originators who do not track leads will find it difficult to determine what went wrong and how to correct it.  

Cultivate sources

To effectively track leads, all mortgage originators should identify at least four sources of business. These sources of business drive leads and help originators close loans. Each source should be easily identified and the leads tangible. Assign an expected monthly lead count to each source of business to determine where your time is best spent.

Most originators will have the two most common sources of business (Realtors and friends/family). The other sources of business are determined by the originator’s experience or where the particular originator feels most comfortable cultivating business. These sources of business can be drilled down into even further to examine where business is coming from and what areas need to be fine-tuned.

In the case of Realtors, in particular, there needs to be a focus on who to devote the most time and resources to and which agent may need to be swapped out. One way to approach that task is to list 15 to 20 Realtors with whom you have a business relationship. Then, assign each of them a label, such as A, B or C — with A representing the Realtors who send you four to six loans per quarter on average, B being those who send two to three loans your way per quarter, and C assigned to those who are sending one loan per quarter.

With this system in place, you can concentrate on the Realtors who are going to send you four to six loans per quarter. This approach allows you to maximize the potential of your top referral partners while also giving you time to cultivate other sources of business.

Whatever your top sources of business are, assign a monthly lead goal to each. It might look something like this:

  • Realtors: 18 leads;
  • Book of business: 8 leads; 
  • Networking events: 5 leads;
  • Volunteering: 5 leads.

This balance provides the 36 leads per month, which, according to the ratios calculated previously, should produce enough leads to hit the funding goal of four loans per month. You can drill down further into this lead number. If 36 leads a month is what is needed to hit a funding goal of four loans per month, and there are 20 work days in the month, then, on average, 1.8 loan leads per day are required to hit the goal.

A good management approach in this case would be to set a goal of generating two leads a day. If you have failed to get any leads by midday, then you may have to work the phones to ensure the daily lead goal is reached. If you hit the lead-count goal, but not the loan-funding goal, then it’s time to look at the quality of leads. This approach can be effective in helping you stay on a consistent track toward success.

• • •

Mortgage originators should review the lead count for each of their lead sources on a regular basis. If one of four lead sources is not where it needs to be, for example, then focus on that lagging source of business and find ways to augment it, which will help you get it to the level it needs to be to achieve success. Tracking your leads and knowing your ratios as an originator will lead to greater results and a fulfilling career.


  • Michael Ninomiya

    Michael Ninomiya is the South Florida regional manager at VanDyk Mortgage Corp. He has successfully owned, created and managed three top-producing mortgage offices, and has mentored, coached and launched the careers of more than 100 loan officers and mortgage managers. Ninomiya is a featured speaker for real estate groups in Miami and Broward County and has sat or sits on the board of directors of several industry associations in South Florida. 

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