How Do You Handle Requests For Rate Quotes?
Almost every borrower wants to know one thing right off the bat when they call you: what’s the interest rate. How do you handle the question when it comes up? Do you try to avoid the question? Do you give into the borrower’s desire to shop and immediately quote a rate with a corresponding APR (for TIL compliance)? Deciding how to address the interest rate question is something many loan officers struggle with, but it’s not necessary. Read on for a simple method for handling the interest rate question fairly and effectively.
With so many variables affecting interest rates, it’s almost impossible to quote a rate before first gathering some information. Will the loan be conforming? Will the borrower be stating their income? Will the property be an investment? What is the LTV requirement? Will there be a second mortgage involved? What is the source of down payment funds? The answers to all these questions and many more will affect how a loan officer can price out the loan, as you already know.
It seems odd, then, that a loan officer would feel compelled to immediately quote an interest rate to a borrower within the first thirty seconds of an initial conversation - simply because there are too many unknowns! However, if a loan officer stalls or dodges or tries to avoid a borrower’s question, it generally makes them look bad in the eyes of the borrower. This presents a situation where the loan officer must either oblige the borrower and quote a rate or she must handle the situation smoothly so that the borrower is satisfied even though the question has not been answered.
An easy way to satisfy the interest rate question without answering it directly is to simply reply “it depends”. The rate depends on so many factors that that’s really the only true and accurate answer a loan officer can give anyway, without guessing. By explaining what is meant by “it depends”, the loan officer gets the chance to make an impression on the borrower that she knows what she’s doing - more so than the competition down the street that instantly quoted a rate without knowing anything about the borrower’s situation.
Furthermore, by simply answering “it depends”, a loan officer gets the chance to set an appointment with the borrower at the office later to discuss the situation (which means take the application). At that time, under more favorable circumstances and after discovering everything there is to know about the borrower’s situation, loan programs can be presented along with the various interest rate options that accompany them. Some loan officers prefer to focus more on satisfying a borrower’s monthly payment needs instead of the interest rate itself, though most borrowers will end up closing with the first loan officer that gives them the time and attention that they need as long as the interest rate is competitive.
By no means is the “it depends” response the only good response. There are many out there. How do you handle the request for a rate quote?