Working through the mortgage and home buying process is a cooperative effort that hope ends in a better borrower experience. It’s also an effort that can be full of stress for everyone, especially if the relationships between brokers, lenders, agents, and clients aren’t great. On top of a bad experience all around, lenders that don’t attend to borrower satisfaction can kiss positive word-of-mouth goodbye. That may mean losing out on the patronage of future buyers.
How do you create better borrower experiences to avoid these woes? According to research from McKinsey & Company, there are four factors that most impact customer satisfaction during the home buying process. Those factors are speed, simplicity, reassurance, and transparency.
Check out six ways lenders can create better borrower experiences with transparency below.
While mortgage processing times had been trending down through the years, the COVID-19 pandemic and high applicant and home sale volumes drove up average processing times in 2020. Even then, top performers could complete the process more than 60% faster than their counterparts.
Speed is one of the important customer service factors identified in the McKinsey research, so lenders want to be fast when they can.
However, borrowers understand that buying a house with credit is a complex process. Most people also understand when external factors like a pandemic or historic housing market create further complexities. Lenders can use transparency to create better experiences for borrowers by being upfront about such issues and giving as accurate timelines. It may be better to under promise and over deliver in some cases.
Despite the push to go digital with every possible thing during the COVID-19 pandemic, research from Fannie Mae found that home buyers still tend to prefer in-person contact for some or all of the mortgage process. In 2018, only around 7% of people said they would want to handle the entire process online. In 2021, that number had only risen to 12%.
Part of the reason for this is that transparency works better face-to-face. Most borrowers aren’t comfortable dealing solely with an unnamed digital entity; they want to know that the person handling their application and answering their questions is experienced, is capable, and cares about their needs.
Whether lenders have local offices or not, they can create a more personal relationship with borrowers by:
- Connecting borrowers with a specific person who will be their touch point rather than providing a hotline where they can reach multiple reps
- Ensuring account rep bios and pictures are listed on the site to put faces on the names
- Providing multiple options for communication, including email, phone, online chat, and video chats
A desire for in-person or face-to-face connections for borrowers doesn’t mean that some of the processes shouldn’t go digital. Around 99% of lenders are turning to technology to drive benefits that include simpler processes, reduced time to close, and fewer requirements for data entry.
Fannie Mae looked at what tasks worked digitally for home buyers. As of 2021:
- 54% wanted to learn about the mortgage process online
- 57% wanted to get pre-qualified via a digital process
- 69% preferred to submit financial documents via the internet
- 44% were okay receiving loan updates digitally
- 46% say they preferred reviewing the final loan details online
You can see that the split for many of these tasks is reasonably even, making it essential for mortgage companies to provide multiple ways for people to provide, receive, and review information.
Fees and financial figures are incredibly important to the mortgage process, and lenders that want to create better borrower experiences should double down on communication and transparency in this area.
The utmost transparency calls for discussing fees in-person with borrowers (or on the phone, if face-to-face isn’t possible). Lenders must also provide details of fees in writing. It may be good to provide multiple options for receiving the information, such as giving printouts, sending the information in an email, and providing a client portal where home buyers can view the information on demand.
Include information about purchasing, mortgage, title company, and closing fees. Make sure the home buyer understands what might be required in the way of inspections and who is paying for it. Double-check that home buyers are on the same page as everyone else regarding closing fees or any other payments that may need to be made before the deal can close.
Much of this work may be done by the broker, but lenders should always take the time to ensure everything was disclosed and understood.
According to research from The Markup, there may be inherent and hidden bias in some mortgage approval algorithms. Researchers analyzed more than 2 million conventional loan applications and found that people of color were more likely to be denied even if all other factors were steady.
Being upfront about application and approval processes helps reduce the chance that home buyers may feel they’re being treated unfairly. Develop processes for keeping borrowers up to date to minimize funding surprises on the day of or very near closing. If it doesn’t look like a loan will go through, ensure there are communication processes in place so home buyers aren’t strung along with potentially false hope.
Funding escrow with a large down payment amount can be stressful, and home buyers want to be sure they’re sending money to the right accounts. Having a secure, easy-to-use payment process can be a great way to improve the borrower experience.
Paymints.io offers white label payment processing services that help you ensure excellent borrower experiences. Schedule a demo now and find out how we can help.