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Study: Cost of Doing a Mortgage, One of Biggest Concerns of Consumers

By
Mortgage and Lending with Mortgage Consultant, Right Trac Financial Group, Inc. NMLS # 2709 NMLS # 6869

“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.  

Cost of refinancingThey 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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Joe Petrowsky, NMLS #6869

Right Trac Financial Group, Inc. NMLS #2709

110 Main St.

Manchester, Ct. 06042

Office: 860 647-7701 x116

Fax: 860 647-8940

Cell: 860 836-9294

Email: joe@righttracfg.com

www.righttracfg.com

www.joepetrowsky.com

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Joe Petrowsky does not guarantee nor is in any way responsible for the accuracy of the information provided herein, and provides said information without warranties of any kind, either expressed or implied.

Equal Housing Statement: We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. We encourage and support an affirmative advertising and marketing program in which there are no barriers to obtaining housing becuase of race, color, religion, sex, handicap, familial status, or national origin.

Jon Kolsky
Kolsky Realty & Management - Long Beach, CA
Licensed California Real Estate Broker

Joe~ solid information for all home buyers...thanks!

Oct 26, 2012 02:19 AM
Roy Kelley
Retired - Gaithersburg, MD

Thanks, Joe, for sharing this story.  There are many mortgage borrowers that should be refinancing their homes while the rates are so low.

Have a great day and an outstanding weekend.

Rose, Brookside Gardens, Wheaton, Maryland

Oct 26, 2012 02:38 AM
Debbie Reynolds, C21 Platinum Properties
Platinum Properties- (931)771-9070 - Clarksville, TN
The Dedicated Clarksville TN Realtor-(931)320-6730

Joe, These poor folks have been lead astray so many times. I am glad they found their way to you so you can get it done for them with no more runaround.

Oct 26, 2012 04:14 AM
George Souto
George Souto NMLS #65149 FHA, CHFA, VA Mortgages - Middletown, CT
Your Connecticut Mortgage Expert

Joe, I read a different report on the same thing and in fact already ruffed out a blog on that I will post within a couple of days.  I found it interesting that even though 84% stated that cost were the most important thing that a significant number of them did not mind paying more if the Lender was known for excellent customer service.

Oct 26, 2012 05:16 AM
Lou Ludwig
Ludwig & Associates - Boca Raton, FL
Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Joe

People need to work with a "mortgage Professional" to find their needs.

Good luck and success.

Lou Ludwig

Oct 26, 2012 10:24 AM
Tammy Lankford,
Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668 - Eatonton, GA
Broker GA Lake Sinclair/Eatonton/Milledgeville

I had my mortgage guy "do the math" and when it was going to take 8 years to get back my closing costs in savings... refinancing for the small difference wasn't worth it.

Oct 26, 2012 11:02 AM
Hella Mitschke Rothwell
(831) 626-4000 - Honolulu, HI
Hawaii & California Real Estate Broker

Joe: Bet those clients were very happy with you and will recommend you. We certainly will if possible. Too bad you are not in California.

Oct 26, 2012 11:52 AM
Conrad Allen
Re/Max Professional Associates - Webster, MA
Webster, Ma, Realtor

Hi Joe.  What happened to truth in advertising for lending?

Oct 26, 2012 09:12 PM
Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living
Joe, this is another perfect example why it pays to shop around and also work with a real mortgage professional and not one that acts like one on the Internet.
Oct 27, 2012 03:50 AM
Gay E. Rosen
Julia B. Fee Sotheby's International Realty - Larchmont, NY
As Real as Real Estate Gets!

Joe-  so glad that they (finally) found their way to you  and your good counsel. Thank you for sharing. Always nice to know that there are good and reputable mortgage pofessionals like yourself. Silly question, but are you licensed  in Westchester too?

Oct 28, 2012 01:02 AM