A lead of any type is a sales term that refers to a potential client. A "mortgage lead" provides information on a potential client looking for a mortgage. Leads are golden in sales, especially in entrepreneurial industries, such as lending and real estate. After all, without clients, mortgage brokers and realtors wouldn't have a business.

Because leads are so important to the health of a sales-based business, additional businesses are now offering leads to sales professionals for a fee. In the lending world, Mortgage brokers pay fees, either monthly, annually or per lead to get these mortgage leads in hopes that by making first contact with the potential client, they'll be able to eventually turn them into paying customers. Leads can turn into clients, and that is the hope that salespeople have�and why they pay such large dollars for leads.

How Do They Work?

Perhaps the most popular way of gaining leads is through the internet. This shouldn't be a surprise, as companies such as LendingTree.com and HouseValues.com offer to consumers the chance to submit their personal information to several lenders or realtors to, in a sense, have the professionals compete for their business. This often seems like a good deal for both consumers and professionals, as these services often provide the much-needed middle-man step in the real estate and lending industries: bringing the two parties together.

There are several companies online who offer internet mortgage leads to lenders and mortgage brokers, either in the form of non-exclusive or exclusive mortgage leads. A non-exclusive lead is one in which the person's information is sent out to more than one mortgage broker. This would happen in a situation in which the potential client is trying to shop around for the best lending deal or the most competitive broker.

An exclusive lead, on the other hand, is more lucrative for the mortgage broker, because that lead information will only be sent to that one broker. In the case of a non-exclusive lead, the consumer wouldn't benefit from multiple companies battling for their business, but they would benefit from having only one professional having access to their personal information and then helping them through the lending or home-buying process.

Cost vs. Benefit

The downside to mortgage leads for most professionals is that they must pay fees for leads that don't always work out. Statistics show that mortgage leads lead to an actual sale only 5% to 15% of the time�not exactly a huge return. However, by researching reputable companies that provide internet mortgage leads, and by shopping around for reasonable prices for good leads, sometimes just one sale generated from a lead can pay for an entire year's worth of lead fees.

The decision of whether or not to participate in a mortgage leads program is a business one that most mortgage professionals and lenders have to weigh. Essentially, it comes down to a basic business plan in order to determine what, exactly, is the best way to gain potential clients. For consumers, it's simply a matter of staying informed. Be aware of what types of personal information you're giving out and consider the pros and cons of allowing your information to be given to several lenders�or just one. In today's information age, it's essential to keep an eye on personal information, and make sure that it's only being sent out to those people and companies you've specifically authorized.

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