Knowing a Borrower’s Mind
You may think that your daily life is a series of actions forced on you by others. Or perhaps it is a series of actions based on habit. A report to your boss, your spouse always sleeping on the same side of the bed, visiting the local Starbucks before work. Bigger decisions, however, are much more complex. What kind of car should I drive? Where, if anywhere, will I retire? And if you’re about to buy a home, or refinance, where do you go?
According to data from STRATMOR’s MortgageSAT Borrower Satisfaction Program, 87 percent of borrowers make a lender decision based on a referral or existing relationship. Do I need to spell out eighty seven percent for emphasis? And depending on the lender, a client may go for the best rate, the product that best fits them, the one with the best customer service, the name brand they recognize, or their local lender down the street. What are you going to do about it?
First, STRATMOR’s report dispelled some myths. Only two percent choose their lender primarily because of testimonials they’ve read although 43 percent read one or more testimonials to confirm their choice in lender. And only five percent of borrowers choose their lender based on rate. Wholesale shops, however, work with brokers who are much more rate sensitive, even if their clients aren’t.
Of those potential borrowers interested in reading testimonials, most will visit the lender’s website to read them. Lenders, if you’re not posting reviews on your website, you’re missing an easy opportunity to connect with borrowers.
This is second nature to an experienced loan officer, but knowing the local market and having experience and connections with local people such as real estate professionals and appraisers can make the process easier and less daunting for the borrower as well. STRATMOR’s research showed that so far in 2020, 47 percent of non-builder purchase loans came via a real estate agent referral. If a lender can not only make the borrower happy but the real estate agent as well, or even put in extra effort and “delight” them as STRATMOR’s Mike Seminari suggests, it should be a slam dunk. “If one in every two purchase borrowers are being sourced by real estate agents, that means half of lending revenue for a great many lenders in the U.S. is dependent on keeping these referral partners happy.”
A good originator will hold their client’s hand while the loan is in process, especially first-time home buyers. What program fits? What documents are required? Do you need a mask at the notary? According to STRATMOR’s MortgageSAT data, communication issues remain the top cause of problems in the loan process, occurring on 15 percent of loans. Trust is part of the equation, as is setting expectations.
Lastly, every loan officer “boosting sales” break out session I’ve ever attended talks about catering the approach to the client. A good LO knows if the client wants texts, phone calls, faxes, hand-written notes, or in-person meetings. Some may want a lot of communication and be “high touch,” while others likely only want to communicate electronically and not with constant phone calls. For tactics to improve borrower satisfaction, check out STRATMOR Group’s outstanding article, “The Seven Commandments for Optimizing the Customer Experience.” Above all, a good mortgage lender can often simplify the process and make it less confusing and complicated for borrowers and increase the likelihood that the borrower will refer their friends and return to you for their next loan.