Digitizing Mortgage Loans for Fast Transactions

Digitizing Mortgage Loans for Fast Transactions
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In response to consumer expectations, digitization and faster exchanges are becoming the new normal in many industries. Just as digital payments are replacing paper checks, manual processes that involve paperwork are being replaced by online self-service tools that speed up the approval process for loans and mortgages. While the actual transfer of funds may ultimately be instant, if the overall process takes weeks, the final exchange will not appear instantaneous to the consumer.

Digital mortgage lender Better Mortgage was founded in the wake of CEO Vishal Garg’s frustrating home buying experience, in which he and his wife lost their dream home after weeks of navigating the mortgage process, phone calls, and mailed papers.

Another buyer with cash on hand was able to advance on the couple and close the house. This forced Garg to create a mortgage operation that enabled borrowers to compete in the seller’s market. Today, the company simplifies the mortgage approval process from weeks to minutes.

“We have better digitized the entire mortgage process to eliminate fees, unnecessary steps, and time-wasting appointments,” said Ziggy Jonsson, Head of Financial Products for Better Mortgage. “Instead of the traditional experience based on manual and paper-based documents, customers can upload and electronically sign documents, obtain loan estimates in seconds and a pre-approval letter in less than three minutes.”

Keep costs low and customer satisfaction

However, home insurance requires more than just getting pre-approved. An enthusiastic seller may choose a buyer who can get money for him immediately, as was the case for Garg.

Additionally, a buyer with cash on hand may have an advantage over a buyer seeking a conventional mortgage if the mortgage company isn’t moving fast enough. Jonsson said Better Mortgage customers can close escrow 10 days faster than the industry average.

“Online lenders provide more transparency and speed to customers,” Johnson said. At best, you’ll get a personalized quote – [a] Loan Estimation – Seconds, pre-approval in less than three minutes and no set-up or lending fees.

“Offline lenders have to do a lot of paperwork and do it manually which is why the response time is usually 45-60 days for loan approval and processing. The best process is entirely from start to finish online so our response time is Three to six weeks for a single-family home.”

Besides paperwork and phone calls, traditional mortgage operations have fees and costs to cover the work that goes on behind the scenes. Johnson said that by eliminating a lot of the work related to traditional mortgages, the fully digital platform is also lowering costs, ultimately saving borrowers money that would otherwise go to buy a home.

“By eliminating commissions, our borrowers save an average of $3,500 in fees on each loan, allowing people to choose better areas with better schools or more convenient transportation,” he said.

Not every step of buying a home with a mortgage can happen in a mobile app, but even these processes can be speeded up and made more convenient with digital integration and a central customer interface, according to Johnson.

As primary borrowers are with a lender, the digital interface should be intuitive and provide a central platform for borrowers to navigate and find information regarding the status of their mortgage applications.

“Customers can use our digital platform to schedule phone calls,” Johnson said. “We have tracking tools that inform customers of progress and any steps they need to take, similar to how FedEx updates customers about a package shipment or Grubhub when a pizza is delivered.”

The digital future of home buying

As the industry continues to evolve and adapt, Jonsson said the simplified approach, better uses for mortgages, is likely to become more popular. He believes that home buying will become a fully digital transaction, similar to what consumers now face when ordering groceries through Instacart or everyday items on Amazon.

“Technology now makes it more convenient to snap and buy homes. After the pandemic, leaders will be the ones offering a simplified, digital journey to home financing,” Johnson said. “According to the National Association of Realtors, millennials—many with young children—are now the largest group of homebuyers, and their digital native preferences will shape home buying for years to come.”

As with other financial services, borrowers expect to open an app on their phone and know instantly what’s happening with their mortgage. They want to find relevant answers to their questions and feel that their inquiries and requests are moving.

Some mandatory waiting times are included in the mortgage process by law and therefore cannot be avoided or speeded up, but digital tools may help consumers deal with them positively by providing a clear roadmap. No matter how quickly they cash out, consumers won’t feel the benefit of paying faster if they get stuck in the process that gets them there.

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