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   ARTICLE   |   From Scotsman Guide Residential Edition   |   September 2010

Create Transparency, Build Trust

Calm nervous would-be borrowers by educating them at every step

Educating borrowers early and often can make the difference between closing and failing to close a loan. Mortgage brokers who help clients understand loan terms and conditions, industry changes in the past three years, and alterations yet to come can create transparency and build trust -- which can lead to increased closing rates and more referrals.

Many mortgage applicants are about to make the biggest purchase of their lives. They're often nervous about taking the leap, concerned about finding the best deal and worried about having someone take advantage of them. At the same time, many applicants will struggle to understand the numbers and loan offers presented to them.

Brokers should dedicate themselves to helping in every way possible.

They also should realize that educating borrowers in today's market often involves working with those who have access to a wealth of information. Many mortgage prospects now visit brokers only after gathering information online. Internet searches can lead to details about mortgage rates, programs and more. These searches also can inform prospects about new legislation, regulation changes and the rights of mortgage consumers.

Many prospects will find this information but fail to understand it. Brokers should explain it and shed light on every step of the loan process.

Providing transparency shouldn't be a hassle. Brokers should embrace every opportunity to educate consumers. They also should ensure their employees take the same approach. If necessary, brokers should ramp up education internally and make sure everyone working for them obtains a well-rounded industry understanding.

By educating clients early and often, brokers and their employees can help make sure nothing surprises consumers. Brokers also can correct misinformation prospects might find online, some of which could confuse or mislead.

One of the worst things brokers can do is assume prospects will educate themselves. This can cause consumers to feel abandoned and deceived and to reach incorrect conclusions about important aspects of the mortgage process and their loan. Brokers who do this face the prospect of watching clients take their business elsewhere.

A great example of an opportunity to embrace transparency comes with the good-faith estimate (GFE) implemented earlier this year. The purpose of the form is to help borrowers understand the costs associated with mortgage offers. The form also aims to allow borrowers to compare mortgage offers easily. In some cases, however, borrowers find the form's format and cost breakdowns less-than transparent.

Brokers who explain the form carefully can help borrowers overcome that confusion and can create a broker-client relationship built on trust. Building these relationships can be especially challenging at a time in which many consumers continue to hear negative media portrayals of brokers and the mortgage industry at large.

As we approach the final quarter of this year, legislators and regulators continue to strive to add transparency to the mortgage process. Their efforts alone, however, won't fully educate borrowers. Doing that requires mortgage brokers dedicated to serving clients and providing them with patient and well-articulated explanations of their loans and the industry at large.

By educating borrowers early and often -- and striving for transparency at all times -- brokers can help mortgage lending return to its place of prominence in the U.S. economy while also ensuring their own future in the business of real estate finance.


 


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