Who is the main driver of the borrower's journey in refinance business compared to the purchase money market?
The coming purchase money mortgage market is going to bring a lot of changes for lenders, not all of them welcome. The Mortgage Bankers Association's most recent mortgage volume forecast puts purchase money business at 75% of all volume now. It could get higher in 2022.
One of the big differences lenders will see this year will be the borrower’s journey. Borrowers follow a different path from application to close on refinance versus purchase money transactions. It involves a different process, a bit more complexity, and different expectations on the part of both the borrower and the real estate agent.
One error some lenders will make is putting their emphasis on the wrong customer.
Refinance business is driven by the borrower. They search online, find a better mortgage rate, and begin the mortgage refinancing process. Even when lenders can get loan officers to initiate contact with the borrower about a refinance, the borrower is still in the driver’s seat.
That’s not really the way it works on the purchase money side. Lenders that spend all of their time focusing on the borrower’s experience during the refinancing process at the expense of the agent will not do as well.
In a purchase money market, it’s the real estate agent that drives the borrower’s journey. For lenders to get aboard, they need to make the agent the primary focus of their customer satisfaction efforts.
This is not to say that the borrower's experience doesn’t matter, it does. But you can satisfy a borrower and never get another deal from an agent who wasn’t as satisfied.
This job requires a purchase money mindset on the part of the lender. It means keeping the agent informed through a single point of contact and, above all, closing the loan on time.
Our Borrower Center allows lenders to provide a great experience for both borrowers and agents. But without such technology, lenders should make sure that the agents that refer them business have a great experience before shifting their focus to the borrower.
By Joe Camerieri, EVP, Client Account Management at Mortgage Cadence
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