Here’s how lenders can help homebuyers get mortgages

43% of first-time homebuyers don’t understand mortgage lending

Federal regulatory agencies are pushing to loosen the credit box, as home prices slowly rise and mortgage rates remain near all-time lows. This is just a small sample size of headlines that first-time homebuyers have to wade through when they are deciding if now is the best time for them to buy a home.

“It’s a confusing time for a borrower, especially with the regulatory changes. It leaves a lot of people wondering, but there is a lot available for people out there,” said EverBank Executive-Vice President of Mortgage Operations Tom Wind.

According to the J.D. Power 2014 U.S. Primary Mortgage Origination Satisfaction Study released Thursday, first-time homebuyers are having difficulty understanding the mortgage process and the options that are available to them.

The survey found:

  • Among survey respondents purchasing a home, 58% are first-time homebuyers. Lack of experience among these customers and uncertainty about the process may influence how they first inquire about a mortgage, with 48% heading to a lender’s local office to meet with a loan representative in person and receive personalized advice.
  • Customers want a transparent mortgage process. More than one-third (35%) of all mortgage customers—and 43% of first-time home buyers—indicate they do not completely understand the process, resulting in an average decline of 179 points in overall satisfaction.
  • The majority (54%) of first-time homebuyers indicate they don’t fully understand the different loan options available to them. Only 41% of first-time buyers and 56% of experienced mortgage customers indicate their representative completely explained the types of loans, terms, special programs, fees and options to reduce their down payment.

However, even though many borrowers feel like they are left in the dark for the majority of the mortgage process, there are a lot of options and resources out there for them.

Wind explained that the best way to combat the issue is with a very experienced and knowledgeable sales team. “Rates are still really attractive. I would encourage borrowers to look for qualified, experienced loan officers and hear what is available. People would be surprised that they could qualify.”

“A good measure of the quality of your mortgage banker is not only how willing and qualified they are to answer your questions, but how many questions they ask you. If they’re doing their job, they will be asking you a good amount of questions to find the option that best suits your financial situation,” said Bob Walters, chief economist with Quicken Loans. Quicken Loans ranked highest in customer service for mortgage originators for the fifth year in a row, according to the J.D. Power study.

Julie Griffith, senior vice president/Tulsa market leader with BOK Financial (BOKF), explained that they approach it in several different ways:

"We go a little old school, which is to get them in the door. Just emailing them is not the best way to understand, get them face-to-face. We also encourage their participation in first homebuyer training classes. It is not required, but we try to encourage it, especially if they seem to be truly concerned. We offer them multiple options so they can truly compare. Most lenders just go to one product and they don’t realize that they have other choices.

We try to show them two to three options just so they know."

Griffith added that it’s a great time to be a homebuyer. However, lenders need to realize that borrowers may be intimidated by the mortgage process and need someone to hold their hand. If they can find that relationship, it will be really beneficial for both the lender and potential homeowner, she added.

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