7 Ways Technology Is Changing Mortgage Approval
Technology has shifted everything in our lives, from global videoconferencing with overseas business partners to posting pictures of our favorite latte art on Instagram — even to searching for your perfect new home online.
But one thing that hadn’t been streamlined was the way you financed that home. That is, not until recently.
Consumers want DIY financing
According to a recent survey from Discover Home Loans, “Nine out of 10 respondents used some sort of online technology to help them with the home financing process.”
Even Freddie Mac and Fannie Mae announced recently that they will no longer charge mortgage lenders a fee to submit loans to their automated underwriting systems — making it that much simpler for your lender to get on board.
So what can you look forward to as a loan seeker in the digital marketplace?
1. Comparison shopping and online reviews
Do you look at Yelp before choosing a restaurant? You can do that with mortgage lenders now too. After you provide some high-level information, Trulia pulls up a list of about 30 providers and their quotes. This enables you to browse multiple options and choose the ones you want to get a personalized quote.
Plus, you can sift through the more than 130,000 lender ratings and reviews on the site to help you comparison shop.
2. Electronic prequalification tools and calculators
For Mark Reinoso, senior loan officer at Velocity Financial in Phoenix, AZ, technology has transformed the way he does business. Digital tools like Loan Sifter help him better serve his clients.
“Six years ago, I would have had to pull out all my matrices and compare LTV [loan to value] and FICO credit scores and requirements for each borrower, then contact the rep for rates on each program and hope they’d get back to me within 24 hours,” Reinoso says.
That old, tedious process? Now condensed from four hours down to about five minutes.
3. Online applications
Online applications make the mortgage process more efficient, allowing lenders to spend less time chasing down documentation. Important tax documents created with online tools like TurboTax can even be uploaded directly to your lender.
It sounds silly, but one of the most time-consuming things about securing a mortgage is all of the paperwork you have to sign. No more driving and signing. Today, you can sign digitally from your computer, then email the documents back.
5. Smartphone apps
With proprietary apps, lenders and borrowers can track the loan’s progress as it moves through the process — with pings along the way to notify you of any outstanding documents or signatures.
6. Anywhere, anytime technology
Now you can roam freely without worrying you’ll miss an important deadline for your loan.
“A recent client spent a month between the sale of their previous home and the purchase of their new home traveling the country in an RV,” says Eric R. Croll, a senior loan adviser for RPM Mortgage in Lake Oswego, OR. “RPM’s technology allowed us to handle the loan requirements for the new purchase via their smartphone as they traveled.”
7. Behind-the-scenes automation
As a borrower, you probably won’t see how technology helps your lender stay up-to-date on the latest regulations, but it’s helping your homebuying process move forward without delay.
“The new technology helps keep us compliant,” Croll explains. “With ever increasing regulation, we could waste much of our time keeping track of how many days we have to send, receive, sign, or disclose various items to the client in order to operate within those regulations.”
These behind-the-scenes automations allow lenders and borrowers to keep the transaction on track, without additional delays for mailing or having to meet face-to-face at every step.
Hyperconnected = efficiency
“Instead of [clients] copying their driver’s license and then faxing or scanning it to try and get it to me, they can take a picture on their phone and text it to me,” says Mark Reinoso. “I never thought I would be texting with my borrowers so much. I think I text more than my 16-year-old daughter.”
But if you’re looking to buy a home anytime soon, keep in mind that in addition to the convenience of the company’s tools, the experience and competence of the loan officer you choose should still be an important consideration in securing your home loan.