Last week I wrote about the value of service professionals guiding consumers through a complicated purchasing process – like getting a mortgage. It’s just as vital that consumers find the right service professionals because bad or unclear advice can be worse than seeking no advice at all.
In reacting to the same survey we highlighted about consumer confusion in the mortgage process, Alex Stenback of Behind the Mortgage wrote, if getting a mortgage turns into a headache “…you might have just picked the wrong lender (think person, not organization here).”
Stenback mostly harps on getting quality customer service, especially in terms of clear and frequent communication from salesperson to borrower. That’s definitely important, but a slick salesperson can provide great customer service superficially while still overcharging the borrower. This is why trust is so important – there is simply no way (except comparison shopping) that the average consumer can evaluate the deal they are receiving from a mortgage lender.
The wrong lender can end up costing consumers a lot of money and – in too many cases recently – their home as well, whether it was after a teaser rate spiked or the borrower just realized they had taken out a loan they never could have afforded. Incentives for lenders are not often designed to encourage them to get their customers in the appropriate-sized loan at the lowest rate possible. The more someone pays in fees or a higher interest rate, the more the salesperson makes, and in some cases a LOT more. (Note: Congress has taken up legislation to curb these types of incentives but the efficacy of such efforts remains to be seen.)
The problem is it may be easy to determine you picked the wrong lender after the damage is done, but how do you find the right lender before any decisions are made? If you are like most people, you ask your friends for a personal recommendation. Studies have backed this logical process, showing that people get better deals from people they know or someone with whom they share a connection. So if you don’t know a mortgage lender then you might ask your close friends if they know someone. If they do then great, you’re in business. But the reality is reaching out beyond a few dozen email contacts is a time consuming process, and often yields little results. So a lot of people don’t find that connection and end up walking blind into a bank off the street.
At Stik.com we’ve given consumers the opportunity to reach more trusted sources of recommendations with a lot less effort. We’ve discussed the benefits of this to sales professionals before, but consumers are also a big winner here.
Finding the mortgage banker that is recommended by one or more of their friends, as opposed to opening a dialogue with a stranger, is a great way for consumers to ensure they’re getting started with the right professional.