When it comes to fretting over the accuracy of closing costs quotes, you probably tend to think of that as a necessity only after the borrower is pre-approved, once you’re already originating the loan in the loan origination system (LOS). Pre-approval is all but a formality, a step needed just to get the homebuyer’s foot in the door, right?
Maybe that approach has worked in the past, but in today’s purchase market, the stakes have gotten much higher. We’re all fighting over the same homebuyers. And while, we at LodeStar Software Solutions, have insisted before in our Deeper Thoughts blog that things aren’t quite as apocalyptic as some keep saying, everyone can agree the market certainly isn’t looking its best these days. With mortgage loan application volume down and rates up, lenders are sweating to compete.
Fee Closing Education for Borrowers
Why not offer borrowers clarity about closing fees at the very beginning of the lending process? Homebuyers, especially first-timers, likely have never heard about simultaneous policy calculations, transfer taxes, recording feels or special state fees. And, yet, these and other fees factor into what they’ll need to pay out of pocket come settlement. Knowing what the closing costs will be for any property in any state in the country, from the very beginning, gives lenders a vital opportunity to offer guidance (read: better service) to buyers.
We at LodeStar are passionate about homebuyer education, especially first-time homebuyers who want more than just a lowest interest rate. They want an industry insider to guide them through the mortgage process, which, for those who don’t originate mortgage loans for a living, can be more than a little intimidating and confusing.
It’s important to remember that buying a home is one of the biggest and most important financial decisions in a person’s lifetime. From the originator’s perspective, the homebuying process is an everyday affair. But from the buyer’s perspective, it’s a stressful, exciting, momentous event.
That’s why lenders should seize any opportunity to provide clarity to their borrowers and find meaningful ways to acknowledge just how big of a deal this is for their clients. It helps borrowers feel valued and more at-ease, and it gives lenders a competitive edge.
Now, homebuyer education takes a lot of time. At risk of reminding you for the millionth time that the mortgage industry isn’t exactly a walk in the park these days, suffice it to say spare time isn’t something most of us have in spades. That’s all the more reason to embrace automation everywhere you can.
Automating the Fee Quoting Process
Automating the fee quoting process with an integrated closing cost calculator in both your LOS and BeSmartee is just one way you can streamline the whole process and focus on servicing the customer.
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Not only are you streamlining the fee quoting process during both the pre-approval and origination stages, you’re doing so without the slightest compromise in quote accuracy. When you integrate a closing cost calculator directly into BeSmartee, you’re getting the same numbers during the pre-approval stage that you’ll put into your loan estimate (LE). That means you can quote with absolute confidence at every stage of the lending process.
Even though tolerance cures don’t apply to cost estimates given at the pre-approval stage for underquoted fees, many lenders overquote fees on the initial cost estimates. To reiterate an earlier point about today’s competitive market, overquoting to cover your back — instead of knowing beyond a shadow of a doubt from the outset exactly what closing costs will be — puts you at a huge competitive disadvantage. If a borrower compares your quote to another lender’s, you could very well lose the client.
When you integrate a closing cost calculator into BeSmartee, that guarantee of security and confidence from the very beginning applies to more than just conventional loan types. Automating the fee quoting process allows you to maintain a consistent level of both ease and accuracy for FHA, USDA, VA, cash-out refis, new construction, HELOCs, reverse mortgages and other types of loans.
When you’re pulling quotes through LodeStar’s hyper-accurate, in-house managed database of closing costs, you don’t have to worry if the particulars of the loan type diverge slightly from the beaten path. That applies to any property, anywhere in the country, whether you have lots of experience with a particular local fee structure or not.
The bottom line is that wherever you can save time, offer a better quality of service to homebuyers and hone the accuracy of your quotes, you absolutely should. A closing cost calculator is a fantastic way to up your game, especially if you take advantage of it early on in the origination process.
No one is immune to the difficulties of today’s mortgage industry, but you certainly can take some of the edge off the harsh competition by embracing an automated solution. Schedule a demo to learn more about our automated closing cost calculator.