Lending Tree has a new survey out showing that consumers will go out of their way to save $.10 on a gallon of gas before they will go to a mortgage rate comparison site on-line.
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EXACTLY!!!!!
Frank, I kept waiting for you to mention the Loan Officer and kept waiting and waiting and then you finished. The reason people don’t shop their loan is that they choose the loan, because they are comfortable with the loan officer and can trust him. They work with companies that make the process simple and easy to understand. People that are organized and honest and can cut thru the disclosures that they absolutely, 100% could care less about. They want their payment, closing costs and how much am I bringing to the table. All the piles of Government garbage is worthless to people that want the facts and nothting, but the facts and they want to know when am I closing? They trust us to not cheat them because we never cheated the previous 35,000 clients that came before them. They want to see Angie’s List or BBB. They want their friends that went thru us previously, to say it was the best loan transaction I ever had and then they are ready to go. That is called FREE Enterprise and Word of Mouth referrals. The Government has absolutely nothing to do with any of it and just gets in the way and causes massive hardship and delays to these people. That is how most people choose their mortgage. Our Loan officers are Professionallly Trained People, not call center lenders that the Government wants to create. That is why people don’t shop their rate, but TRUST us to alwasys be near the lowest in the market. It is that simple, no matter how much the Government is raising the cost and diminishing the service to customers.
Bruce, that’s exactly what I said at the end of the show in closing. Guess you didn’t wait long enough! 🙂 Have an awesome day man.
Consumers are asking people, friends, family, co-workers about interest rates. They are putting all that information together to decide where to go for a mortgage. If they are shopping rates online, it is to verify what they have been told. Didn’t LO/Broker Compensation take care of the issue of getting the best rate already?
I am not surprised that so few people use comparative shopping tools when getting a mortgage.
Both Lending Tree and NAR have done studies that indicate that 48% to 52% of home buyers never even contact a second mortgage company when arranging a mortgage for teh home they are purchasing. (This may be different when someone is "shopping" for a refinance.) And of those that do talk to at least one more mortgage company half stay with the first company they talked with.
In otherwords, people simply do NOT shop for mortgages. Period. In the minds of the home buyer the mortgae is a "necessary evil" just like the rest of teh closing process. They are focused on AFFORDABLILITY…not cost. When you are talking about a few dollars difference a month in most mortgage payments (out of a payment that is going to be in the hundreds of dollars) people simply are not thinking about that amount that represents over the next 30 years.
I agree that people are reluctant to use sites like this because of the flood of people trying to contact them.
I am a REALTOR and I often get leads sent to me to help a contact look for a home. Only to find out that the person was only trying to look at rates to see what they might qualify for in the future. They are flooded with calls from lenders as well as real estate agents even tho they didn't ask for assistance.
Why are these people's names and contact information given out to so many?
The folks I have spoken with are very frustrated and sorry that they ever signed up!
Especially after the last 10 years of foreclosures and short sales, a large number of buyers have “issues” to discuss and work around that require the help of a trusted advisor. Then there are all of us who are commission only earners and can’t just provide a W-2. We don’t fit neatly into the on-line site’s boxes.
Consumers who seek out a Loan Officer oftentimes do not fit into a neat little “box”. Many consumers seem savvy enough to know that whatever the website says MAY NOT be the final rate/terms in the end, based upon their particular situation and needs. The entire loan process is somewhat complex and an overly simplistic website may appear unreal (phony) to a consumer. Then websites will ask for too much confidential information, which makes a consumer uncomfortable. Worst of all, before the consumer has logged off, they start to get marketing calls aplenty, which can be irritating. Hopefully, Andrea has considered all of the above as reasons that consumers would rather shop for a new toaster, but not a loan for their home!
Local personal service. You Can not beat it with a web page…
The statement “Consumers may be too focused on price or the monthly payment and fail to consider the lifetime cost of interest…” doesn’t make any sense. The monthly payment is a direct function of the interest rate, so how can it not be considered by a borrower when getting a mortgage loan? Furthermore, to state that the impact a 1% difference in an interest rate has on a 30-year mortgage loan “…can easily translate to thousands of dollars…” is the height of understatement! The difference between the total cash outlay over the life of a 30-year loan at 4% compared to one at 5% is $64,156, which would hardly be considered just “…thousands of dollars.”
I believe that the reason borrowers are not comparison shopping online for loans is because it is much too confusing for them. There are innumerable ways to deceive borrowers into believing that lenders’ deals are the best, and, quite often; in the final analysis they turn out not to be. Of course, by that time, few; if any, borrowers want to start the entire loan process over again.
Also, what they invariably fail to overlook, or ask about, is the cost of the their loans; which is as important, if not more important; than their interest rates. Just knowing a loan’s interest rate and not the cost, is like having a peanut butter and jelly sandwich without the jelly. You can’t have one without the other!
The statement “Consumers may be too focused on price or the monthly payment and fail to consider the lifetime cost of interest…” doesn’t make any sense. The monthly payment is a direct function of the interest rate, so how can it not be considered by a borrower when getting a mortgage loan? Furthermore, to state that the impact a 1% difference in an interest rate has on a 30-year mortgage loan “…can easily translate to thousands of dollars…” is the height of understatement! The difference between the total cash outlay over the life of a $300,000, 30-year loan at 4% compared to one at 5% is $64,156, which would hardly be considered just “…thousands of dollars.”
I believe that the reason borrowers are not comparison shopping online for loans is because it is much too confusing for them. There are innumerable ways to deceive borrowers into believing that lenders’ deals are the best, and, quite often; in the final analysis they turn out not to be. Of course, by that time, few; if any, borrowers want to start the entire loan process over again.
Also, what they invariably fail to overlook, or ask about, is the cost of the their loans; which is as important, if not more important; than their interest rates. Just knowing a loan’s interest rate and not the cost, is like having a peanut butter and jelly sandwich without the jelly. You can’t have one without the other!
I believe the results are skwed becuase it lumps mortgages in with other types of loans like cars. If I go and buy a new car and the dealership is offer 0% for 60 months, why would I shop? I would be interested in seeing the results of the survey if mortgages were broken out of the group. I do believe people rate shop, and more today than at any time in our history.
actually, it's amazing how misleading online lender advertisements can be yet there is no CFPB enforcement.
maybe consumers see thru the rate lies of lendingtree type lenders?
Mortgage loan rates & programs can be intimidating to consumers. It seems to me that most shop for a good referral from friends, family and coworkers they trust before hitting the computer and going it alone.
If you’re of the mindset that consumers don’t want to research detailed mortgage information online, well, the ‘trend’ is not your friend. More consumers start their mortgage search online than any other time in history. That is not to say that comparative lead farm sites are the answer – I do however think that providing detailed offers on your own site, or sites that provide exclusive engagement with the consumer build trust with the online consumer and are highly converting.
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