If you borrowed money from a mortgage lender last year, odds are you’re fairly happy with the experience.
Overall customer satisfaction is at a seven-year high, according to the latest J.D. Power and Associates’ annual ranking of mortgage lenders. Lenders scored an average of 771 out of 1,000, or about a C+.
Every year, J.D. Power asks customers of the 25 largest lenders in the country to rate their experience with four parts of the mortgage origination process, including the application/approval, the customer’s loan representative (also known as the loan officer), the closing experience and the contract.
In this year’s survey, for the fourth year in a row, Quicken Loans came out on top, earning 841 points out of the 1,000. Quicken is the only lender that passed the 800 mark, though BB&T came close with 798, followed by U.S. Bank (783), PNC Mortgage (778) and Chase (773).
The results were skewed slightly toward refinances, which made up a larger volume of response. Customers who refinanced tended to be happier with their lender than those completing their first home purchase simply because those refinancing are more familiar and comfortable with the process, said Craig Martin, director of the financial services practice at J.D. Power and Associates.
Because first-time homebuyers aren’t as clear about their loan options as repeat home buyer or refinancing customers, they need more old-fashioned hand-holding to have a good experience.
“What that [first-time home buyer] requires of the lender is to focus on over-communicating with those individuals, because you have to assume they aren’t going to fully understand” the process, Martin said. “Folks may be shy about asking questions and they’re going to agree to things in the end that they do not fully understand.”
Mortgage financing has become somewhat commoditized, and many lenders are offering similar loan programs at similar interest rates. Because it’s hard for lenders to differentiate themselves with interest rates so low, they’re trying to focus on improving the customer’s experience to gain new business.
“One of the things we noticed is that … problem prevention is an opportunity,” Martin said. “The most common problems are things like customers not being called back in a timely manner or customers not being able to get a hold of their loan representative.”
Good communication was a key factor for all the lenders that scored well because the highest ranked lenders are proactively communicative, Martin said, meaning they make calls to follow up with customers quickly, provide them with information as the process continues and are readily available.
All this is really good news for consumers, who should expect a better customer experience with top-ranked mortgage lenders, particularly because the market is so competitive right now. With refinance volume dropping, lenders have to replace that business with borrowers who are buying new homes rather than refinancing existing properties.
“Borrowers should feel empowered to ask questions, especially about the process” of getting a loan, Martin said.
He recommends that borrowers ask who they will be working with and how they will be updated on the process. Just asking those questions will “give you a good sense of what your experience will be like,” he added. “You have to feel comfortable that they will give you good information on a regular basis. It’s really about reducing your stress and feeling comfortable in the process.”
Ilyce R. Glink’s latest book is “Buy, Close, Move In!” If you have questions, you can call her radio show toll-free (800-972-8255) any Sunday, from 11 a.m. to 1 p.m. EST. Contact Ilyce through her Web site, www.thinkglink.com.