Digitizing mortgages for fast transactions
In response to consumer expectations, digitization and faster disbursements are becoming the new normal in many industries. Just as digital disbursements are replacing paper checks, manual processes involving paperwork are being replaced with self-service online tools that speed up the loan and mortgage approval process. Although the real money transfer may be instantaneous at the end, if the overall process takes weeks, the final payout will not seem instantaneous to the consumer.
Digital mortgage lender Better Mortgage was founded following CEO Vishal Garg’s frustrating home-buying experience, in which he and his wife missed out on their dream home after weeks of navigating the process mortgage, phone calls and documents sent by mail.
Another buyer with funds on hand was able to get ahead of the couple and close the house. This compelled Garg to create a mortgage process that allowed borrowers to compete in the seller’s market. Today, the company is working to streamline the mortgage approval process from weeks to minutes.
“Better has digitized the entire mortgage process to eliminate fees, unnecessary steps and time-consuming appointments,” said Ziggy Jonsson, Head of Financial Products for Better Mortgage. “Instead of the traditional manual, paper-based experience, clients can upload and sign documents online, get loan estimates in seconds, and a pre-approval letter in as little as three minutes.”
Keep costs low and customers happy
However, securing a home requires more than just pre-approval. A motivated seller can choose a buyer who can give him the money immediately, as was the case with Garg.
Additionally, a buyer with cash may have an advantage over a buyer seeking a traditional mortgage if the mortgage company does not act quickly enough. Jonsson said Better Mortgage customers can close escrow 10 days faster than the industry average.
“Online lenders offer more transparency and speed to customers,” Jonsson said. “At Better, you will get a personalized quote – [a] loan estimate – in seconds, pre-approval in as little as three minutes, and no origination or lender fees.
“Lenders who are not online have to work with a lot of paperwork and do it by hand, and that’s why their turnaround time is typically 45-60 days to approve and process a loan. Better’s process, start to finish, is online, so our turnaround time is three to six weeks for a single-family home.
In addition to paperwork and phone calls, traditional mortgage processes have fees and costs to cover the work that goes on behind the scenes. By eliminating much of the work involved in a traditional mortgage, a fully digitized platform also reduces costs, ultimately saving borrowers money that can be spent on purchasing mortgages. a home, Jonsson said.
“By eliminating fees, our borrowers save an average of $3,500 in fees on each loan, allowing people to select better areas with better schools or more convenient commutes,” he said.
Not every step of buying a home with a mortgage can happen in a mobile app, but even those processes can be speeded up and made more convenient with digital onboarding and a centralized customer interface, Jonsson says. .
As borrowers have the primary point of contact with the lender, a digital interface should also be intuitive and provide a centralized 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,” Jonsson said. “We have tracking tools that tell customers about progress and what steps they need to take, the same way FedEx tells customers about sending a package or Grubhub about pizza delivery.”
The digital future of home buying
As the industry continues to evolve and adapt, Jonsson said the simplified approach used by Better Mortgage will likely become more mainstream. He believes buying a home will become an all-digital transaction, similar to what consumers currently experience when ordering groceries through Instacart or everyday items from Amazon.
“Technology now makes finding and buying a home more convenient. Post-pandemic, the leaders will be those who deliver a streamlined digital home finance journey,” Jonsson said. “According to the National Association of Realtors, millennials – many of whom have young children – are now the largest group of home buyers, and their native digital preferences will shape home buying for years to come. .”
As with other financial services, borrowers expect to open an app on their phone and immediately know what’s going on with their mortgages. They want to find relevant answers to their questions and feel that their questions and requests are progressing.
Some mandatory waiting periods are built into the mortgage process by law and therefore cannot be avoided or expedited, but digital tools can help consumers address them in a positive way by providing a clear roadmap. No matter how quickly funds are disbursed, consumers won’t feel the benefits of faster disbursement if they get bogged down in the process that gets them there.