The trillion-dollar mortgage industry is largely fenced by the banks. But recent trends in mortgage lending is threatening to chip away bit by bit of this gargantuan of a financial empire by making the lending process more appealing to the borrower market.
Today, new players are starting to emerge with the promise to deliver mortgaging as a quicker and more efficient process than what your traditional banks offer.
Many of these smart players offer the bait of convenience through technology. A quick search online leads you to various sites that advertise their lending services. Most of these are non-traditional mortgageplayers.
But how did they come about?
Indeed, it is unlikely for the mortgage business giants to let small competitions proliferate but their guards were down after the 2008 crisis when the government tightened regulations on mortgage lending, too many borrowers weren’t able to pay their mortgages and demand was low. There wasn’t much money, so as to say.
An opportunity – though a risky one – many other players seized their chances, offering mortgage products when the big players were turned away. This allowed for the evolution of new mortgage lenders who do not require deposits from their borrowers and who stepped up their lending game by taking advantage of emerging technologies that help facilitate efficient mortgage processing.
So who are these entities who are gradually changing the dynamics of mortgage lending?
Non-Bank Lenders
Big players such as the Bank of America, Wells Fargo, and US Bancorp, among others slowed down on mortgage lending after the crisis. The suits and fines fired their way, along with the restrictions via regulations caused them to shy away from the business, paving the way for smaller businesses to cover the void.
These non-traditional lenders are usually small-time entrepreneurs who have to answer to fewer regulations and therefore have more leeway on their mortgage offerings. They target borrowers who have a hard time qualifying for the mortgages offered by the big players. You can identify them as your local mortgage lenders who are usually run as family businesses. They can also be in the form of credit unions which benefit their members immensely with low mortgage rates and personalized services.
Online Mortgage Lenders
In a society where almost every need can be answered by the internet, it’s only practical for mortgagors to step into this domain and tap into the massive demand. These lenders offer paper-free transactions where the applicants need only to fill up the necessary forms, input the needed information, and upload the required documents for their mortgage applications to be processed. These streamlined processes are a huge appeal for borrowers to want to take advantage of current mortgage rates.
Online mortgagors not only process mortgages. Their websites also offer helpful borrower tools that could aid them in the process of mortgage financing such as mortgage calculators or estimators, provides news and tips via blog articles, and helps them tap into mortgage information at the very comfort of their homes.
These are your brokers. Usually, they appear as blog sites online which help you locate lenders who are the ones to process your mortgages. These brokers offer a trove of rate and lender options, take your basic information for the initial process of application and sifts through their database for the best match.
If you do not have time to do the search-and-comparisons yourself, these brokers are the ones to get to.
The appearance of these new players is indeed changing the way we do lending. And, as new tools and opportunities arise, there are bound to be even more changes in the future. As a borrower who now has more options, you now have no reason to face financing unprepared. Do your end of the bargain and see to it that you are in good shape before you apply.
