BLOG VIEW: Borrowers today have an unprecedented level of access into the inner workings of the mortgage process, thus enabling them to self-educate and come to the closing table better prepared.
However, as experience shows, it’s still important for borrowers – particularly first-time homebuyers – to speak face-to-face with a mortgage expert capable of understanding their unique financial needs.
Today’s competitive market offers some strong opportunities for borrowers to learn everything there is to know about the mortgage process – but lenders still need to have in-depth conversations with borrowers in order to gain a holistic understanding of their needs and future plans.
Lenders need to be prepared to work with these more-educated borrowers. What follows are some of the questions today’s borrowers are throwing a lenders – and how lenders should be prepared to answer.
Borrower Question: “Other than fair rates, what additional value do you bring to the table?”
This is one of, if not the, most important question asked by borrowers. Despite recent rises, rates remain historically low and uniform across the industry which means lenders must provide their customers more than just a “low-rate deal” if they are to differentiate themselves. Instead of focusing solely on interest rates, lenders should help borrowers understand the ins and outs of the mortgage process itself, map out various scenarios and provide borrowers with tools to improve how they search for and identify a home. For example, instead of thinking of themselves as salesman, lenders can engage with borrowers as mentors and educators who guide them through the mortgage process with the heart of a teacher. This way, they can help borrowers make the best financial decision possible.
Borrower Question: “Every lender talks about the standard 30-year fixed rate mortgage, what other options are on the table?”
There is no “one-size-fits all” mortgage. Every borrower has a unique financial situation, so even though traditionally the most common mortgage is the 30-year fixed rate loan, it does not necessarily make it the best option available for every borrower.
Lenders today have the unique opportunity to go above-and-beyond for their borrowers by helping them identify the loan best suited to their financial situation and goals. Lenders should consider that some borrowers may be better fit for a 15-year fixed rate loan, or even a variable rate mortgage, if they look to pay off their home more quickly than others.
There are also numerous opportunities to utilize government-sponsored programs which may not have been available to borrowers in the past.
Borrower Question: “Should I introduce you to my financial advisor, and how can the two of you work together?”
Financial advisors know the specific details and intricacies of a borrower’s financial situation and budget. When making a big financial decision, such as taking out a mortgage, it usually helps to include trusted fiduciary financial advisors in the decision-making process and collaborate to craft a smarter mortgage plan for the borrower to follow. Doing so helps the borrower make more informed decisions, which means he or she will be more likely to return for mortgage advice in the future – establishing that all-important lifelong relationship.
Borrower Question: “As a first-time homebuyer or a new buyer in today’s market, what should I be on the lookout for?”
It’s essential for borrowers to be open and considerate of all potential options in order to make a thoughtful, strategic mortgage decision. Lenders should be prepared to not only discuss basic loan product distinctions to help borrowers decide which is the best fit, but also help them incorporate their long-term goals into their home purchase.
Borrowers should never commit to a house based solely on emotion or instinct. Instead, they should have a clear understanding of what they are looking for in a future home to avoid overspending or experiencing buyer’s remorse.
When a borrower is truly ready to buy a home, it is always better to start the loan process long before selecting a specific property. Lenders can better encourage borrowers to approach them early in the process by offering such benefits as pre-underwriting or pre-approval programs.
Borrower Question: “There seems to be little opportunity for first-time homebuyers in today’s market. Why should I be excited about buying a home?”
Being a homeowner can be overwhelming, but once borrowers have a clear understanding of the mortgage process and are confident they are working with a trusted advisor, it becomes much easier to generate that excitement.
It also does not hurt that right now is one of the best times to buy a home because the market is so competitive. Since rates are low, it’s more likely borrowers will be paying a fair price on a home and can focus on working with their lender to select the loan product best suited to their individual financial needs.
Neil Christiansen is Denver branch manager for Churchill Mortgage.