Mortgage lenders are constantly working to make the borrowing process painless for their customers. But one in five borrowers still encounters an issue with their transaction, according to new research from Snapdocs and STRATMOR Group.
The “State of Borrower Experience” report surveyed 7,000 Americans who completed a mortgage transaction in the last nine months.
The researchers found that borrowers are typically happy with the application process. Data suggests this is the result of dedicated efforts by mortgage lenders in the last decade, and that effort has paid off: 67% of respondents rated the experience of filling out a loan application an 8 or above on a 10-point scale, where 10 represents a “very easy” process.
“Lenders have made significant strides over the past decade in improving the application process. In working with lenders historically, the application was where many borrowers became dissatisfied with their mortgage experience,” said Mike Seminari, Director of Customer Experience at STRATMOR Group.
“As lenders have invested in technology to streamline the application process with POS technology, we’ve seen significant improvements in borrower satisfaction at the application.”
Problems typically begin to occur in the document collection and processing phase.
Borrower perception during this time is shaped by a lender’s communication skills. Respondents reported document collection to be the most difficult step. When they found a document request to be “unreasonable” it severely damaged their experience.
The report suggests focusing on clear, simple communication to alleviate these problems. Explaining to a borrower exactly why multiple iterations of documents are necessary can correctly set their expectations, making requests seem less burdensome.
The pre-closing and closing processes create the most problems for borrowers, with one in three reporting an issue during these phases.
Respondents said their biggest issues were lack of preparedness, delays, and errors in closing.
Not having the opportunity or enough time to review their closing documents significantly impacted their scoring. Additionally, if their paperwork confused them they gave a low rating to their experience.
The researchers noted that fixing errors during pre-closing and closing is the easiest way immediately improve customer experience. Focusing on these areas offers the most opportunity and greatest return.
Offering digital closing and closing-adjacent technology to streamline the process can highly impact the borrower’s experience.