When mortgage professionals examine the cost-benefits of updating their loan process and borrower experience, the conversation tends to revolve around efficiency and the value of taking days off of the loan cycle.
And these are perfectly good reasons!
But sometimes that narrow-minded approach can lead a lender or LO to hesitate on making the necessary investment. After all, loans are closing and what’s a couple of days, right? Is it really worth the time and money to overhaul our process?
As it turns out, there’s a lot more value to be gained than “just” more efficiency.
Delivering a world-class experience to borrowers has many downstream benefits that can positively impact a business.
Not Having to Compete on Rates
It’s true that some borrowers will always shop for the lowest rate they can find and are willing to sacrifice on experience or days-to-close in order to secure a slight improvement in the rate department.
But talk to just about any top LO and they’ll tell you that they don’t obsess over having the lowest rates. That’s not their competitive differentiator and their pipelines are still bursting at the seams.
Instead, their past clients and referral partners all know that when you work with these LOs you can trust a loan will get closed, on-time, and it won’t be like pulling teeth to get there.
Because the LO has nailed down their workflow, is responsive, educates the borrower, communicates timely information and updates, and offers the modern digital toolkit that empowers borrowers to take a more active role in their financing process.
There is tremendous value in having those comforts for what may be the largest financial transaction of a borrower’s life.
As with many other products or services, cheaper doesn’t always mean better. And for that reason, plenty of potential borrowers will forego a slightly lower rate in exchange for a smoother and less stressful experience.
More Positive Testimonials
Testimonials are a powerful marketing device for any business.
Studies have shown that as many as 91% of customers read online reviews before making “buying” decisions. It’s very likely that a prospect is going to take a few minutes to search up the lender and see what others had to say about working with them.
And in the mortgage industry, the borrower’s experience and therefore their testimonial is almost always a direct reflection on the loan originator and their process.
Read testimonials online and you’ll regularly see the LOs name show up in the review whether it’s “working with John was amazing” or “working with John was awful”.
When you can offer your borrowers a smooth and stress-free experience, it’s much easier to ask for those important reviews and much more likely that they’ll be a glowing reflection of what it’s like to do business with you.
The flip side of that coin? It’s not pretty. When the experience is poor the odds are the testimonial will be even worse and can quickly tank an LOs reputation.
More Enthusiastic Referrals and Repeat Business
Think about why a partner or former borrower would choose to refer their clients, friends, and family to you over the many other possible options.
For a Realtor partner, they have two major considerations when evaluating where to send referrals and both could have big effects on their business.
First, if you don’t do your job well they don’t get paid on time or maybe even at all. Second, they have to carefully guard their own reputation and ability to generate more referrals from their clients. How poorly does it reflect on the Realtor if they refer a client to you and that person has an experience that leaves a bad taste in their mouth?
When a past borrower comes back for a refinance or refers their friends and family to you, it’s because the process went smoothly and there were little to no issues with communication.
They had questions that were answered in a timely manner, they always knew where their loan stood, and they were given access to systems that made their contributions easier with as little impact on their lives as possible.
Check those boxes and you can be sure that the next time someone asks one of your borrowers where they went for financing, the answer will be “you have to talk to my LO, working with her was SO easy” and not “we got the loan, but it was so difficult that I would find someone else next time”.
More Prospects Converting to Borrowers
The mortgage industry suffers from an interesting phenomenon where the average application pull-through-rate hovers around the 70-75% mark. Meaning that only 3 out of every 4 applications submitted get the clear-to-close.
Now think about how many applications never even get submitted. Maybe they simply don’t get finished, the prospect went with a different lender, or because the applicant just isn’t quite ready to give that all-important credit authorization.
It’s an astronomical number and yet also reveals a side of the business where there is a lot of upside for an LO to capture more loans by converting those prospects into borrowers at a higher rate.
Start at the beginning: the loan application. Does yours work for you, or against you?
The average borrower these days is used to having the “Turbo-Tax” experience where filling out a form as complicated as a tax return is made easy. The software does the heavy lifting, asking just the right questions in bite-size pieces so it never feels overwhelming.
These companies gain millions of dollars in market share by delivering on an experience.
LOs can create a similar experience and remove the friction in the application process by implementing the right system. You’ll find less prospects will abandon the application part way through. Some will see it as a sign of how easy it will be to work with you.
Systems like Floify double-down on this part of the origination process by offering features like automatic needs list generation and integrated credit reporting so that prospects are presented with options to immediately continue their journey with an LO. Speed wins in business.