6 Ways For Mortgage Lenders To Improve the Customer Experience

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Mortgage lenders have experienced a significant amount of turmoil over the last year. Rising interest rates paired with high home prices have resulted in a drop in mortgage applications. Many professionals felt the pain with industry-wide layoffs among lending companies of all sizes.

In January 2023, however, the nine-month decline of new mortgage originations finally broke, thanks to a 32% increase in rate lock volume. This opens the door to more opportunities for lenders, but differentiating your business from others is still a must. 

A great way to take advantage of today’s shifting mortgage market is to create a seamless user experience for each stage of the customer journey. Here’s how to do it — plus why it’s so crucial to prioritize these changes. 

Why customer experience is important in the mortgage industry

Before you start evaluating your customer experience strategy, get motivated (and get company-wide buy-in) with these three reasons for creating a customer-centric focus. 

1. Win new business

It’s more important than ever to stand out to potential clients. According to a McKinsey study, homeowners indicated that the biggest differentiating factor in choosing a lender, right after getting the best rate, was the customer experience. And among first-time homebuyers, customer experience was actually the most important factor.

The number one way to get the word out there is through social proof. And in today’s world, that comes in two ways: word-of-mouth recommendations from friends and family and your online presence — including reviews. 

It’s important to regularly monitor your online reputation, proactively bring in good reviews, and establish your own presence on social media platforms. One study shows that 86% of consumers are hesitant to purchase from a business with negative reviews. New leads perform their own research online, and it’s where they get their first taste of what it’s like to work with you. 

2. Retain existing clients

Some lenders don’t do a whole lot to set themselves apart, especially once they acquire a customer. But this is a missed opportunity, particularly since customer acquisition costs decrease significantly for repeat borrowers. In fact, one study estimates that customer acquisition costs five times more than retention!

This is why it’s important to craft a post-closing marketing strategy to build relationships that are less transactional. You’ll remain a trusted resource while keeping your name and contact information on their mind as they navigate future decisions, such as refinancing, purchasing a second home or investment property, or using home equity financing. 

3. Boost efficiency while reducing costs

When you focus on a seamless customer experience, you’ll simultaneously create a faster loan origination process that ultimately lowers the cost of doing business. The right systems create an environment that is ripe for growth, both with excited new customers and the ability to serve and scale.

Let’s take a look at the average cost to originate a new mortgage. At $10,900, implementing efficiencies to save just 5% (or $545 per loan) can snowball into substantial savings each year. 

The top 6 CX opportunities for mortgage lenders (+ how to  capitalize on them)

Ready to maximize your customer experience? Here are six strategies to incorporate into your business model.

1. Transparency and communication

While the loan origination process is a daily routine for you, each of your customers (especially first-time homebuyers) is going through it as a unique experience with little or no knowledge of what’s about to happen.

You can remove that fear of the unknown by increasing communications throughout the process and providing education on what steps are coming up next. 

Here are details that every applicant should know at every stage of the loan origination process:

  • Where their loan application stands
  • How long the current step should take
  • What the next step looks like
  • Any current and upcoming action items for the borrower

There are plenty of automation tools to integrate into your technology or CRM platforms — or you may already have those capabilities and simply don’t know about them. In fact, one recent study showed that 43% of CRM customers use less than half of the features available to them. Request additional training to make sure you’re making the most of the software your company already uses.   

2. Digitization at every step of the customer journey

The Covid-19 pandemic certainly sped up the adoption rate of digital mortgage processing, and now customers have come to expect this as the norm. In order to truly maximize the customer experience, however, it’s important to incorporate online resources into all steps of the journey. Here are some ideas to get started.

Website chatbots: Integrating chatbots on your website and in the applicant portal help customers find answers to their questions quickly and easily. And customers are happy to tap into this online resource, particularly if they’re learning about your brand. One recent study showed that 80% of consumers have had a positive experience using chatbots. 

Streamlined online application process: Over 90% of mortgage lenders now offer online mortgage applications — but there is still a disconnect between lenders and applicants on how long that process should take. While most lenders advertise a 30-minute application, the majority of borrowers report more time spent on their application. Finding ways to support an easier application can be a major differentiator. For instance, create in-depth educational content on what information applicants need in order to quickly complete the form. Send this information as part of your email welcome sequence and include it on your website.

Automatic prequalification and income verification: Automating as much of the origination process as possible saves time and reduces the chance of both fraud and human error. Automation also makes the process easier for the applicants — as an example, it’s easier for applicants to connect to their bank accounts online, rather than having to look for bank statements and upload them to the application hub. 

E-closing: E-closing is a huge time saver for both lenders and borrowers. According to one study, it can shave off 70 minutes and at least $134 per loan. E-closing makes it more convenient for customers to review their documents in advance and also cuts back on shipping and storage costs for lenders.

3. Streamlined troubleshooting

Another key component of a successful customer experience is helping to resolve problems for applicants as they arise. This helps you stay on the expected timeline for closing and improve close rates. Some common issues that could slow down the application include:

  • Credit score: Incorporate credit improvement tools to help borrowers and provide education throughout the process about how to maintain their existing financial profile through closing.
  • Flood zone determination: Don’t be surprised by an unexpected flood zone status that requires extra insurance coverage. Incorporate automated tools that let you and the applicant know from the start what’s required to close on the property. 
  • Homeowners insurance: Although securing a homeowners insurance policy is technically the borrower’s responsibility, it’s also in your best interest to make sure it gets done. Embedding the homeowners insurance process into your systems makes it easy for your customers to find the best policy for them at a price that won’t upset their DTI.

Take advantage of every opportunity to remove friction between the start of the application process and closing day. 

4. Centralized end-to-end process for buying a home and closing

One major struggle that homebuyers face is keeping track of all the key players and action items in the process. The buyer’s real estate agent focuses on negotiations with the seller, someone needs to schedule a home inspector, you’re helping with the mortgage and the appraisal; in other words, there are a ton of moving pieces of the puzzle.

To improve the borrower’s overall home purchasing experience, work on serving as a central resource for all of these different responsibilities. For instance, you can provide recommendations or even integrate some of the following services into your own processes:

  • Real estate agents 
  • Inspectors
  • Appraisals
  • Homeowners insurance
  • Moving companies
  • Alarm systems 
  • Home warranties 
  • Home maintenance services 
  • General contractors 
  • Financial advisors 

In addition to being prepared to answer questions, it’s also smart to anticipate needs before they arise. A great example is the homeowners insurance requirement. Many consumers only think about homeowners insurance when it’s time to close, which often leads to a stressful scramble to find a policy and an increased chance of a delayed closing. 

The burden can then fall on the processor to follow up with the borrower and obtain proof of homeowners insurance. The problem with this? Not only is the processor spending too much time on this requirement, but the fate of your process now rests in the hands of the borrower, who may not be as incentivized as you are to move things forward.Plus, the borrower may end up with a policy that isn’t right for them, or doesn’t meet your business requirements. A great solution is to integrate with Matic to provide end-to-end control of the mortgage process for the lender or servicer while also delivering a streamlined experience, and reduced stress, for the borrower. An extra bonus is that offering home insurance through Matic adds a passive revenue stream to each deal, while also increasing efficiencies.

insurance savings illustration

Want to help borrowers find home insurance within your existing mortgage process?

See how easy it is to improve your customer experience and get started with Matic.

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5. Personalized customer journeys from feedback

As you streamline the loan origination process from a CX perspective, remember to adapt as feedback comes in. Analyze your own client data to gain personalized insights based on your target audience. 

A great starting place for this is reviewing customer service data and analyzing why they call. Find out what questions they’re asking or where they’re abandoning the application. From there you can build that feedback into better systems throughout the process. 

For instance, say a repeat complaint comes up that applicants weren’t getting their questions answered quickly enough, causing them to quit the application process. A possible solution would be to implement a call return deadline to ensure everyone gets a response within a certain window of time, such as the same day or within 24 hours.

Everyone on the team who has touchpoints with customers should be involved in identifying these common trends. If you can help solve one person’s issue, that will likely translate to a larger audience of customers. 

6. Diversity and inclusion with underserved markets

In order to get ahead on upcoming trends in the mortgage customer experience, start focusing on communities that are currently underserved. Not only does this improve your company’s social impact in supporting homeownership access for all, it also allows you to tap into quickly growing demographics. 

For instance, one study reveals that Hispanic homeownership is set to skyrocket by 2040. Building out your Spanish language education materials and hiring bilingual staff members could be a huge differentiator for your company.

Other underserved markets include credit diverse applicants. Find ways to start nurturing that audience now with marketing materials on different home loan programs and tips for improving credit scores. 

Final thoughts

The mortgage industry has faced many challenges in the last few years, but the future is full of incredible opportunities to grow your customer base while delivering a five-star user experience. Now is the time to evaluate every part of your current loan origination process and identify the most impactful areas to be streamlined. 

Interested in learning more about how Matic can help you take control of your customer experience? Request more information or book a demo!

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