Purchasing a home with a mortgage loan is often a long, complicated process. Rightly so, since the loan values are hundreds of thousands of dollars and down payments are typically much less, which exposes the lender to risk. The lender needs to ensure they are funding someone who can ultimately afford to make the payments and that process takes time.
That being said, the digital era has certainly changed the way we consume information and connect with people. The mortgage loan industry has been impacted by this technological change.
Perhaps the biggest impact that technology has had on mortgages has been the explosion of options that consumers have to get a mortgage loan. Gone are the days where the only place you could get a mortgage was the bank on your neighborhood street corner. Now, the Internet gives consumers the ability to compare rates and connect with lenders from across the country. Where banks once dominated the industry, now a majority of the largest lenders in the mortgage space are non-banks. There are even many online-only lenders. This increase in choice has definitely benefitted the consumer.
Technology has also streamlined the mortgage loan application process. Frank Del Priore, a mortgage agent at Mortgage Brokers Niagara, has moved a majority of his loan application process to the digital space. According to him, “People are on their phones all day anyways, so at least they can be getting me the information I need to complete their applications while they’re using their phone.” The paperless process makes things easier for him and his clients.
Administrative costs associated with the mortgage loan process have also been reduced by technological improvements. Technology has automated certain processes and reduced the need for humans to do certain tasks. Not having to pay a human to do certain things has allowed costs to come down. At the same time, these improvements also benefit the lenders because they are able to process new applications faster and respond to customer service inquires more efficiently.
Some lenders are taking this one step further and using technology to create a better experience for their clients. Nowadays, people get multiple status updates on food ordered for delivery from the plethora of apps on their phone. If they can get status updates on food orders that range from $20 to $50, why can’t they get better communication for a mortgage worth $400,000? This is a valid question and some lenders are starting to re-think their overall process. Look for huge growth in this space in the years to come.
The proliferation of “eSigning” apps has also streamlined the mortgage and real estate paper trails. Gone are the days where documents are faxed back and forth. Soon to be obsolete is the email, print, sign, scan and email back process. E-signing is the method of the future, as it saves time, paper and can now stand up legally.
Not far behind is the idea of a “paperless” mortgage. Where the entire mortgage loan process is done digitally. Although a truly paperless mortgage is not common yet, it’s slowly beginning to gain traction. Over time, lenders who have adopted it early will work out the kinks and be able to deliver an excellent level of service to their clients, giving them a leg up on their competition.
In conclusion, it appears as though technology has had a positive effect on consumers and lenders in the mortgage space. Of course, there may be some negatives as well, so if you can think of any, let us know in the comment section!