First-time home buyers struggle to understand the mortgage process, and lenders with boots on the ground stand the biggest chance of winning over such prospects. Still, it is an online lender that continues to rate highest among all borrowers.
On a scale of one to a thousand, U.S. home lenders rated 786 this year. That was an improvement from 2013, when the collective rating was 771.
Six factors — loan offerings, application/approval process, interaction, closing, onboarding and problem resolution — were considered in the calculation of the score.
The findings were discussed in the J.D. Power 2014 U.S. Primary Mortgage Origination Satisfaction Study. Responses were collected from 3,893 recent borrowers who were surveyed from July through September.
The report indicated that nearly half of the 58 percent of survey respondents who were first-time buyers preferred to go to a lender’s local office to meet with a loan originator in person.
J.D. Power noted that with the share of first-time buyers at historical lows, lenders have an opportunity to provide the guidance and reassurance sought by such prospective borrowers.
Just 56 percent of experienced borrowers felt that their representative completely explained types of available loans, terms, special programs, fees and low down payment options. The share dropped to 41 percent for first-time buyers.
An adequate explanation of closing documents was not provided to more than a quarter of experienced borrowers, while 44 percent of first-time borrowers weren’t told enough.
Interaction with the loan originator is one of the most influential factors in establishing the customer experience, according to Craig Martin, who is the director of the mortgage practice at J.D. Power.
“From describing what will happen during the process in terms a customer can understand to explaining the benefits of different options, the loan representative sets the tone of the experience,” Martin said in the report. “A potential challenge with first-time homebuyers is that they may be afraid to appear uninformed, so they won’t admit when they are confused or don’t understand something.
“For a lender to truly stand out, their staff must foster relationships that promote open and honest communication.”
Quicken Loans Inc. maintained it No. 1 ranking among all lenders with a score of 835, not quite as good as the 841 score in the 2013 report.
It was the fifth consecutive year that Quicken has topped the list.
Quicken’s standing seems at odds with J.D. Power’s finding that a majority of first-time buyers prefer an in-office visit given that Quicken originators operate from central offices and not locally.
Detroit-based Quicken scored well in all categories.
No. 2 Bank of America had a score of 807, a huge improvement from 734 a year earlier when it didn’t even rank among the top 10.