Are you selling the rate or building relationships?

For more than 25 years, I have heard lenders complain that their rates are not competitive. One of the first questions customers ask is: “What is your rate today?” For far too long, the industry has focused on interest rates, rather than what truly is the best financial decision for the borrower.

Many salespeople sell rate because they believe this is the way deals are closed. What I’ve learned over the past 25 years of mortgage lending is this: Loan officers don’t win by selling interest; they win by educating borrowers about their options and aligning those options with the borrower’s long-term financial goals.

Do you remember all the ads for “No points, no fees” loans? That is selling. That is not being a Reliable Mortgage Advisor.

So how do you build trust? Trust is earned, and the most effective way to earn it is through education – by offering multiple lending options and helping borrowers understand the financial impact of each option. Presenting a single rate is a waste of time in my opinion.

To properly educate borrowers, you must first understand their entire situation and the property they are financing. How do you do that? Simply: by asking thoughtful questions and then asking follow-up questions.

Let me give you a real example.

I once received a call from a rate shopper who identified himself as an investor. His first question was: “What is your rate today?” He told me he wanted to buy a house with a no-points, no-fee loan.

My first reaction was simple:
“I have fourteen different rates today, and that only applies to one product.”

My second question was much more important:
“How long do you plan to own the house?”

He told me he planned to keep it for 30 years, pay it off and use it as part of his retirement income. That one answer changed everything. That was crucial information.

I asked him to forward the quote he received from another loan officer so I could make a comparison and offer additional options. I also invited him to my office so I could walk him through a complete financial analysis. He agreed.

Fifteen minutes after going through the options, his first statement was:
“I have been abused five times in the past three years.”
He repeated it three times.

Why? Because I showed him the long-term benefits of reducing interest and the interest savings over time. The savings on the first loan alone were more than $54,000. He then asked me to review three additional loans to see if refinancing made sense.

Forty-five minutes later, he walked out of my office, saving more than $200,000 in interest – and promising to take out four loans with me. He never contacted the other loan officer again.

Why?

• Because I asked the right questions. Discovering details is important.
• Because I have presented five loan options. It was no longer about the rate; it was about his financial strategy
• Because I allowed him one trained decision.

Conversations and education built the relationship and ultimately created a powerful referral source.

To him, I wasn’t a salesperson selling a rate. I was a Trusted Mortgage Advisor.

The software I used made the difference. It was completely transparent, provided a clear overview of all costs and provided a full financial analysis, including return on investment over time.

At the end of the process, the true measure of success is not just closing the loan. What matters is whether the borrower would confidently refer their family and friends, knowing they were guided by a trusted professional.

That’s the difference between selling and becoming a Trusted Mortgage Advisor.

Randy Senzig is the founder and CEO of The LANIS Group LLC.
This column does not necessarily reflect the opinion of HousingWire’s editorial staff and its owners. To contact the editor responsible for this piece: [email protected].

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