Elon Musk is talking about taking us to the moon, Silicon Valley billionaires in cargo shorts are building cars you don’t have to drive, and bots are getting smarter and cleverer by the minute. We are, no doubt, living in the dawn of an advanced technological era.
But why does it seem like the mortgage lending industry is still living under a rock?
Enter fax machines and 500-page paperwork. True, you can easily look up interesting listings for a prospect home online, but why does the actual loan acquisition process still feel like walking along yesterday lanes?
According to the Ellie Mae, Inc. Originations Insight Report for April 2016, it takes an average of 45 days for purchase mortgage transactions to transition from application to closing. As the rest of the industries gently move towards the conveniences offered by automation and digitization, the mortgage lending industry remains in a tight relationship with scanners and manual documentations, resulting into painstakingly long mortgage turn times.
The change is slowly realized, however. During the last few years, many companies smartly recognized the competitive advantage of integrating technology into the core of their dynamics. This has resulted in some very positive changes that many other companies in the industry are starting to emulate.
The current pressure, for example, is focused on reducing the time between application and closing. The purchase-focused market urges mortgage companies to reduce closing time to 30 to 35 days.
This tension prompts these companies to look for ingenious ways to meet the collective end, a move that not only benefits them in the long run but also empowers the borrowers towards a more inclusive mortgage process.
In detail, how does technology broadly impact mortgage loan turn times? Here’s a quick look:
- Internal and network databases help the process of input and verification easier. This includes filling in forms and checking the legalities of a claim among many others that reduces the friction in processing, resulting in a better borrower experience.
- Newly developed apps that allow borrowers to monitor their application in real time without the need for asking their lenders for regular updates allows ease in transparency. It also reduces the pressure among lenders in having to keep up with various client requests for updates.
- With new technology specifically designed to cater to mortgage servicers, borrowers cease to be on the waiting bench. Instead, they are given the chance to self-serve and not just passively participate in the mortgage closing process. They have up-to-date monitoring, real-time updates, and quick access to various online and professional lending resources.
- With everything on the line, it is difficult for ill-reputed companies to thrive. If you are meticulous and careful of your lending choice, it only takes a simple search query to verify lender legitimacy. The internet also enables for information to be easily accessible both to buyer and lender, especially updates in policies and government regulations.
- Closing a mortgage traditionally costs about $8,000. The advent of the mobile age takes away all the cost associated with the hassles of conventional lending. This means bigger savings for you, and hopefully, faster mortgage turn times.
Innovation has certainly loosened what has traditionally been a tight process. But it does not guarantee full ease because, in practical terms, it is never meant to. Careful considerations and thorough human input still play major roles in doing mortgage closing right. Tech’s clever ways, however, are necessarily welcome.
Justin McHood is America's Mortgage Commentator and has been providing expert mortgage analysis for over 10 years.