Mortgage

How mobile apps can play a larger role in mortgage lending

How mobile apps can play a larger role in mortgage lending
Written by Publishing Team

With younger consumers with tech skills now approaching prime earnings years, and increased use of mobile devices among mortgage customers in the age of COVID, lenders are looking for ways to serve them quickly and simply in the digital space.

“You just expect things to be easy because you’ve lived with technology your whole life,” said Brad Lawson, co-founder of PrimeLine Capital, a broker that connects with 11 different mortgage lenders.

For the mortgage industry, developing financial applications provides an opportunity to work with growth mobile citizen consumers. I found a study from Realtor.com last year Almost 29 million Generation Zers may be looking to own homes by 2026.

Recent data shows a rapid growth in the popularity of mobile phone use among mortgage customers during the pandemic. According to LexisNexis Risk Solutions, the share of the mortgage lending business, including applications and transactions, is conducted Mobile more than double Within two years, from 12% in 2019 to 16% in 2020 and 29% in 2021.

The industry is on a path already caught on fire by banks to some extent. A study by Morning Consult and the American Bankers Association in 2021 found that in the pre-pandemic period, 33% of consumers were already using mobile apps more than other methods for their banking needs, and between Generation Z and Millennials, the percentages were higher at 48% and 45%, respectively. Since the beginning of the pandemic, these numbers have increased to 44% overall, and 56% and 55% for Generation Z and Millennials.

While financial apps aren’t as popular as social offerings or games, research by software company Simform revealed that their usage time in 2020 was relatively high, at 57 minutes per week, due to the attention people get when making decisions. on them.

For lenders like Fairway or Revolution Mortgage, mobile apps primarily serve as a way to simplify and automate the application process, by uploading or scanning documents. Their apps also allow other parties in the purchasing process to stay updated on the status of orders.

Masana Noma, vice president of marketing at Revolution Mortgage, said that 79% of her company’s loans are via its app.

Even when the loan is closed, the application can remain a vehicle for further engagement, leaving the door open for future re-businesses.

Shane Westra, Chief Product Officer whose team creates apps for more than 400 lenders representing nearly 45,000 loan officers at the housing technology and software solutions provider. SimpleNexusAlthough they may have the same code base under the hood, the design of the app is highly customizable. Some companies require a product that they can offer to a potential borrower, who may not even be ready for a loan, but they can use to search for homes or real estate agents, while others will send it to clients only for the application process, which itself can be detailed. The number of settings runs into the thousands that can be presented in different ways. “A lot of them don’t look at each other the same,” he said.

While reducing paperwork for the client, the time saved can be a boon for the loan officer as well. “I always have a client that offers an online app or a mobile app, just because that takes 20-30 minutes to generate more business,” said Jeremy Schacher, a product branch manager for Fairway Independent Mortgage in Phoenix, which in 2021 generated about 80 million dollars by selling nearly 240 units, it makes me a more efficient builder by owning this technology.

Dan Snyder, CEO of Lower

In addition to being a time saver, Lower Mortgage Financial Technology, which builds its mobile app in-house, also sees its digital tools reduce the fears of new homebuyers.

“If you’re going to buy a house, it’s probably intimidating to go to your local bank,” said Dan Snyder, Lower CEO. “You don’t know where to go, and you probably don’t have any kind of perspective on what you can actually afford. And we solve that online and through our app.”

Although Lower’s ultimate goal is home loan financing, the app also includes personal finance tools that encourage savings and goal setting by “stimulating” the process. Besides loan calculators, the app also includes a savings account that customers can use to deposit money, which can turn into a down payment, with a match from Lower.

“What you see is like early entry into stock trading that was once just your dad or mom. Now it’s really accessible,” Snyder said. “You download Robinhood, you get free stock and you can trade some stocks for free. It is easy to apply. I think that’s the same kind of person that comes through us.”

Even as mobile apps become more prevalent, there are still limitations that prevent the mobile experience from being completely smooth. Unlike many banking transactions, mortgage lending is a much more complex procedure with many steps between application and closing, and not all of these steps can be done exclusively on the application. Many borrowers express their frustration in online reviews about their inability to pay with their mortgage application, unaware that lender and provider are not always the same.

Current regulations also limit the extent to which mobile services can be offered in languages ​​other than English, leaving a rapidly growing market in Spanish. And as the use of mobile devices grows, so does the risk of fraud, which the mortgage industry is striving to combat. Criminals targeting mobile transactions made up 29% of mortgage companies’ total fraud costs in 2021, up from 24% in 2020, according to LexisNexis.

For mortgage lenders emerging in the digital age, their apps also serve as one branch of a larger strategy to attract younger consumers, who are increasingly influenced by their online and social media presence when it comes to choosing which products or brands to support. According to 2020 research by McKinsey & Co., 39% of the Generation Z demographic over the age of 18 and 25% of Millennials cite social media as the main factor behind purchasing decisions. Whether it’s through stadium naming rights, like Lower.com Field in fintech’s hometown of Columbus, Ohio, or a prolific presence on select social media channels, brands matter to younger audiences, even if they’re not associated with the crowd, Noma said. Always with a mortgage.

Unlike most companies, Revolution Mortgage eschews Twitter, instead devoting more attention to Instagram, a site that attracts more younger users. “Our brand is promoted through Instagram,” she said.

“I think that, more than ever, as we move towards the year 22 and beyond, it’s really important. Consumers are now communicating with the brands they want to do business with.”

But the best marketing campaigns are only effective if companies back them with service that makes customers happy, and the lenders that stand out at the top will be those who prioritize speed and digital tools that new homebuyers value, according to Schachter.

“I always encourage creators to embrace technology just because as I get older my clients get younger,” he said. “People love technology, you just have to embrace it.”

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