“Study Indicates: Cost of Doing a Mortgage, One of Biggest Concerns of Consumers”
One thing I have learned over the years, is everyone knows what their service is worth. Unfortunately, most consumers don’t really understand what they get for their money.
A local banker recently referred clients that wanted to refinance their FHA loan, that was secured by a 3 family, that they no longer lived in. They had been receiving all kinds of junk mail, offering to refinance with no closing costs, at 2.75%. Most folks know, when something sounds too good to be true, it usually is.
They responded to the one of these letters, completed an application, paid $500 for an application fee, only to find out after 3 months, that the lender will not refinance a property that in not owner occupied, but were told they can’t get their $500 back.
They then contacted the lender that had the present loan, explained their situation. They were told that they could refinance, there would be no closing costs and the rate would be 4%, which was actually 2% lower than their existing rate.
These client happened to be speaking to a banker, where they do their banking and asked if they could refinance their property. The banks said no and referred them to me.
We took their application, locked their rate at 3.5% and they will have $2,500 in closing costs. Their monthly savings is $592 per month. In 5 months they will have recovered their closing costs, so where was the best deal for them?
Consumers Say Mortgage Costs Top the Issue List
By: Evan Nemeroff
Cost is still one of the most critical components for consumers when it comes to the residential application process, according to a survey conducted by the Carlisle & Gallagher Consulting Group.
The firm, which surveyed 618 respondents online, said 84% of consumers rated cost as one of the five most important issues tied to the mortgage process. Besides cost, other important factors include trust and quality customer service.
During the mortgage application process, 34% of consumers said they would be willing to pay more for a mortgage if it comes with superior customer service. Also, 39% of “pay more” respondents said they would prefer to obtain a mortgage from their primary bank.
“Pay more” consumers tend to be younger, in the 18- to 35-year-old range. Cost conscious borrowers generally are 50 or older and just want the basics during the origination process.
“The ‘online savvy shoppers’ who are younger tend to value customer relationships and often want to be treated as a preferred customer,” Tom Mataconis, vice president of consulting at Carlisle, told National Mortgage News.
"Banks must align to customer values to win mortgage market share," Mataconis said. "Banks that incorporate on trust and customer service as differentiators will gain market share in the new normal. Consumers are a very captive group of folks and it is important to be receptive to their messages and needs."
According to the Charlotte, N.C.-based management and technology consulting firm, consumer confidence towards mortgages looks strong.
For future homebuyers, 37% expect to purchase a new home in the next 10 years. Out of this total, 40% expect to obtain a new property in at least three years, while 44% believe it will take longer than three years.
Additionally, 46% of survey respondents expect their home values to grow significantly over time, compared to only 4% who think their properties are going to lose financial returns on their home investment.
"Even during this crisis, people are still looking at homeownership as something to aspire to. People still want to own their own home,” Mataconis added.
image:freedigitalphotos.net
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