BLOG VIEW: It’s a common saying that individuals make a decision to trust you, whether consciously or not, within ten minutes of meeting you.
Because a loan officer is typically the first person a borrower interacts with, those first impressions are crucial to starting the mortgage process on the right foot. This is especially true at a time when prices are largely consistent across the industry and lenders are differentiated by the relationships they form with borrowers.
Lenders, in the past, largely relied on competitive interest rates to attract borrowers. While this is still a necessary element, consumers are increasingly showing preference for lenders that understand their individual needs – and what they are looking to get out of a mortgage. This relationship-based approach requires a different mindset from the sales-oriented style many originators adopted in the early to mid-2000’s.
LOs must leave behind the idea that there is a scarcity of borrowers – and that we are all directly competing with each other to close a loan. At the end of the day, it’s all about the borrower and their individual success, no matter what. If going with another lender is a good decision for them, then it’s a good decision overall – end of story. Even when the LO or broker is not the one closing the loan, if a borrower reaches out, they still need to prove they had the borrower’s best interests at heart.
This is a game changing mindset. Once one cuts through the idea that there is something to hide – whether it’s the borrower reaching out to other lenders or some nuance around interest rates and specific products – it allows open and honest communication to truly occur. Rather than focusing on making a sale, lenders can then concentrate on making sure borrowers are educated on the mortgage process.
Over the years, I’ve found that LOs oftentimes close their first borrower meeting with the phrase, “We will exceed your expectations.” While this is generally a sincere, honest statement, they’ve already made a critical error by not first asking what the borrower’s expectations are in the first place.
In essence, the LO has created a goal in their own mind, without trying to better understand what the borrower is looking for.
LOs should instead close their initial meetings with “what are your expectations going through the mortgage process?” Not only does this question involve the borrower in the development of their mortgage, it helps the LO better understand what they are looking for. This type of active listening is one of the most important skills an LO can develop as it reveals what the borrower’s goals are and how the lender can fulfill them.
Determining a borrowers’ long-term goals helps LO tailor their mortgage to their specific personal and financial needs. Whether that’s in the structure of the loan or product offered, once lenders understand what success means for a borrower, they can collaborate to create the best mortgage possible. All of this makes issues such as interest rate not as sensitive, because the borrower recognizes the lender has listened to their needs and sincerely desires to help them make a smarter mortgage decision.
While prices may be consistent across the industry, some borrowers still want to shop around based on interest rate. The problem for lenders in this situation is that it can be difficult to guaranty rates without a property in mind or all of a borrower’s qualifying information. This is why education is so critical to the mortgage process. Once borrowers understand how a rate is calculated, they can make a more informed decision on which lender to work with.
For example, in my own practice, I have always explained to borrowers two types of rates: rate quotes versus “real rates.” Rate quotes are what lenders hope they can offer borrowers if they use their services. These are generally the most misleading however, as there is no way to calculate someone’s “real rate” without a great deal of information about the borrower. Those consumers who understand this nuance are better prepared to speak with other lenders and make more educated decisions on who fits their needs best.
In today’s market, partner relationships are also key to driving conversions. Oftentimes, fresh or new LOs will stretch themselves thin by forming as many partnerships as possible. While it’s always a good idea to cast a wide net, it can be even more beneficial for LOs to select partners as if they could never add any others to their network. In my own business, I asked myself “Who do I see myself doing business with every day for the rest of my career?”
Taking this approach frees LOs up to establish more substantive, healthy relationships with their partners. And, as one services those partner referrals and fosters relationships with clients, they will be more inclined to send the LO additional business down the line.
Oftentimes, lenders end up originating their own partner’s mortgages, which gives LOs the opportunity to further establish themselves as a trusted mortgage resource.
All mortgage lenders dip from the same well of their local communities. They all pull rates based on the same borrower information and none are paid more based on their actions.
Lenders must offer borrowers an honest working position from the start of an engagement. In turn, borrowers will reward their LOs with honesty and their own clarity of purpose.
All of this helps establish mutual relationships that benefit borrowers with a positive mortgage experience, and lenders with continued business.
Tim Broadhurst is senior vice president of loan officer development and senior home loan specialist for Churchill Mortgage.
