If there’s one thing I’ve learned in my 15 years in the mortgage industry, it’s that loan officers do not like being “rate shopped.” However, according to the Consumer Financial Protection Bureau (CFPB), consumers aren’t shopping enough.
Be that as it may, increased mortgage shopping is coming. Not because the CFPB says so, but rather, because of forces more powerful than the CFPB (and yes, mortgage professionals, there are indeed forces more powerful than the CFPB, granted not by much).We are going to have more mortgage shopping because of recent moves by internet giants, Google and Yahoo.
When Google and Yahoo users search for terms like “mortgage calculator”, search results now produce a mortgage calculator. Yahoo’s calculator appears after a few paid top spots, and, as I write this, has an ad for Bank Rate on it. Google’s calculator is at the top of search results.
Yahoo Mortgage Calculator
Google Mortgage Calculator
This is not new ground for Google. It has had a mortgage calculator in the UK for some time, and mortgage comparison ads for a short time back in 2009. At the time of this post, Google was seeking to hire mortgage professionals.
Google seeking to hire mortgage professionals
Back to the CFPB for a moment. They, too, are looking to increase the number of homebuyers shopping for a mortgage. They just recently released their “Your Home Loan Toolkit – A step-by-step guide” — a must-read for mortgage professionals. It’s good to know what consumers are being told to look at when getting a mortgage.
SIDE NOTE: I am not going to offer an opinion on the toolkit as a whole. I’ll let you decide its merits . However, one item did make me chuckle. In the section on determining homeowner’s insurance, the CFPB tells consumers, “You can call one or more insurance agents to get an estimate for homes in your area.” I guess it only takes issue when consumers rely on just one lender, as opposed to one provider of any other service.
To be clear, despite what my wife might tell you, I am not against shopping. Nor am I against Google or Yahoo. What concerns me is that I believe most homebuyers do not know how to shop. Most seem to only know how to ask a couple of basics questions − “What’s my rate?” and “What’s my monthly payment?” As I discussed in my previous post when the CFPB came out with their new interest rate comparison tool, a mortgage is not a one-day event. While these are important things for a homebuyer to consider, they are not the only things.
Plus the lowest cost is not always the best choice. You think working with a professional is expensive, wait until you see what it cost you to work with an amateur!
Regardless, as mortgage professionals, we will see an increase in shoppers over the coming months and years. So how do we handle this? As with all business matters, it helps to start with a plan. As you form your plan to compete in the shopping world, allow me to offer a few pieces of advice:
1. Focus on what the borrowers want, not necessarily what they are asking for.
There is an old story that Henry Ford once said, “If I had asked my customers what they wanted, they would have said a faster horse.” Not sure if it is true, but I believe strongly in the truth of the message. Homebuyers don’t want a low interest rate or a mortgage. They want a home. The other items are tools to get what they want. Whenever possible, stay focused on why they want the home and how you can help them achieve that goal.
2. Rate shoppers aren’t shopping rates, they are shopping loan officers.
Homebuyers, especially first-time homebuyers, often don’t know enough about the process to truly evaluate loan officers. So they ask questions they are told to ask. What is your interest rate? How much do I need to put down? What will my monthly payment be? These are certainly questions you will need to help them answer, but remember, what they are really seeking is a professional who they can trust and can help them through this exciting and scary process.
3. Your unique selling point doesn’t need to be unique.
Back in one of my college advertising classes, we discussed a beer company in the 1920s that ran a campaign advertising that their bottles were steam-cleaned. Sales went up. The thing was, at the time, every beer company steam-cleaned their bottles, but no one else was talking about it. Today, everyone says they have the best customer service… great low rates… great mortgage programs. But how you express that idea can help set you apart.
There is no question, the shoppers are coming. The question is, will they buy you?Tags: First-Time Homebuyer, Mortgage Banking, Mortgage Calculators, Mortgage Education, Mortgage Industry