By Mike Miles
There are certain parts of our daily lives where picking the cheapest and fastest service makes sense. Grabbing fast food when pressed for time or deciding last minute to download a movie for family movie night are a couple of examples where cheap and fast work just fine. These work because we’re already conditioned to have lowered expectations. Fast food clearly shouldn’t be of better quality, nutritional value, or flavor compared to a well-prepared and home-cooked meal, but we already expect this so the resulting satisfaction, or dissatisfaction, is usually pretty subdued. It’s fast food. It’s cheap and fast. Know what isn’t known to be cheap and fast? Getting a mortgage. So why do some banks and lending companies advertise they have cheap and fast mortgages? Buyer beware.
Today’s market definitely allows for mortgage interest rates to be considered cheap compared to historic numbers, and rates are even lower in 2020 than expected. However, I’m very cautious in ever using the word “cheap” when referencing anything related to the finance industry, and I think being cost-effective is more responsible than being cheap.
Simply put, underwriting a home mortgage loan generally takes weeks instead of days. Adding compliance rules to an already compliance-heavy process means being time efficient is of greater importance than being fast. Consumers generally make buying decisions based on the price and quality of a product in addition to the service associated. The good thing about getting a mortgage is that the quality of the actual product should be the exact same between companies. For example, a 30-year conforming fixed loan is what it is. It can’t be any different. It’s a 30-year timeline and it’s a conforming product with guidelines instituted from Fannie Mae or Freddie Mac, leaving price and service as the only remaining variables. Price has to do with rates offered and any associated fees. It’s important and objective, so it can be itemized and therefore factual or guaranteed. Unfortunately, service is normally the caboose in buying considerations despite possibly being the most important component.
Service is the glue that holds the mortgage shopping/buying process together, but it’s not something tangible like product and price. While it’s easy to promise, the level of deliverance and satisfaction is based upon the people involved, so it’s very subjective in nature. Basic quality service should include things like:
- Answered calls and quick response time to emails and/or texts
- Client education about product details and underwriting processes
- Efficient sequencing and document managing to avoid excessive and repetitive tasks
- Flexible after hours/weekend availability
- Organized communications with parties involved for timeliness and cohesion
- Transparency of the product, price, and process from start to finish
- Deadlines established and achieved
Inadequate service leads to blown closing dates, extended rate locks (which come at an added cost to the borrower), unneeded stress and anxiety, and an overall unpleasant experience. Service doesn’t have a specific price tag for consumers to measure but should be just as strong a consideration as cost. Because products are virtually identical between lending companies, prices and costs will generally be competitive across the board. Service is the undefined element, and if you hear a loan officer or a company advertise they are the cheapest and fastest, something very important may be missing.
If you’re considering buying or refinancing a home, feel free to call me or my team to talk about service expectations. Even if you’re already engaged with another company we can help identify what you should be looking for to make sure you have the best overall buying experience you can have.
This weekly Sponsored Column is Produced by Fountain Mortgage. Located in Prairie Village, Fountain Mortgage is dedicated to educating, and thus empowering, clients to make the best financial decision possible for their situation. Contact Fountain Mortgage today.
Mike Miles NMLS ID: 265927; Fountain Mortgage NMLS: 1138268