That’s actually a trick question, it should be “Which one is more convenient for the client?” Let’s consider the mortgage experience (what did you think we were going to talk about?). Would you prefer to do everything online or through an app on your phone, without ever being bothered to talk with anyone? Or, would you prefer to have someone take down all of your information and discuss each step with you?
Most consumer analysts would say that today’s average buyer wants to do everything using technology rather than a person, given the choice. This is why you see a lot of mortgage companies advertising a pre-approval or refinance process with little to no human contact. They tout this as super convenient for you. It’s easy and quick!
And, that’s actually a scam. The party that that process is most convenient for is the mortgage company. They don’t need to hire experienced mortgage advisors to educate homeowners. They’ll let you think that their convenient app is in your best interests when mainly it is a huge cost saver for them. By using technology to walk you through the process, their profits are big. Plus, if you don’t have anyone to question – you’ll likely just go with the flow. Their concern is not how many homeowners they put in the right mortgage product – their concern is just how many homeowners they close.
If you are fairly savvy on the markets, mortgage guidelines and products – this is a win, win. You can save money by not working with a real person. If you aren’t a mortgage expert, this process is risky. You’re putting your faith in a company that’s main goal is close as many loans as possible. For them, it’s a margins game and they need to close hundreds in order to keep their margins profitable. Does that make you feel like your long term financial goals are safe in the hands of their app?
On the opposite side of the spectrum, would be working with an advisor who’s first goal will be to assess your bigger financial picture. Have you built your basic financial foundation? There are a few tasks that need to be squared away before you jump into homeownership. Only then is it time to start checking your eligibility for the vast number of mortgage products out there and comparing which loan program will best suit you at this time. (Of course that should come with the guarantee that said advisor would keep in touch with you to make sure you always have the best loan, since your finances are likely to change.)
A human mortgage advisor would then start discussing monthly payments at the top of the price range you qualify for, so that together you can work backwards to find a mortgage payment and down payment strategy that you feel comfortable with. Together, you would zero in on the price point you should be shopping at. Then you begin your search.
While you are searching – the app wouldn’t be doing anything for you, if you had gone with one of the big technology focused companies. A live mortgage advisor would be helping you boost your credit, find the most efficient way to save up money for either your down payment, moving expenses or emergency fund and checking loan programs for each specific home of interest along the way.
The part that makes this seem like a tough choice is that you want the best of both, right? You want to be able to use technology like an online application and document portal, as well as an app to compare payments on the go, to make the process faster right? While also having a real breathing person to guide you along the way… Well the good news is, you don’t have to choose between technology and live guidance, you just have to choose me.