In a world that is becoming increasingly paperless, many modern mortgage companies are leveraging data and technology to their advantage. However, there are still a small number of mortgage companies that contend that homeownership involves a ream of printed out paper with very little work done online. One problem with this approach is that potential borrowers are now used to seamless digital transactions for everything from ordering a cup of coffee to doing all of their holiday shopping; they're likely to wonder why they can't do the same when applying for a home loan. What's more, the paper-centric method can make the entire loan process drag on for weeks.
Fortunately, more and more mortgage companies are using technology to get their work done. This can accelerate the loan cycle, decrease the cost of originating a loan, keep customers happy and maybe even save a tree or two along the way.
The Traditionally Tedious Loan Process
Lenders have traditionally required all sorts of paperwork information from borrowers. While the homeowners-to-be got busy looking up scads of data, the loan process would essentially come to a halt. These documents typically include copies of the borrower's identification, two years of tax returns and W-2 forms (or a profit and loss statement and federal tax info for self-employed folks), pay stubs for the last month, two months worth of all bank statements including IRA and 401K info and — in certain cases — a mortgage gift letter, pension statement and/or a divorce decree. Even the most organized borrower will need a while to gather up all of this information — in a perfect case it might take a couple of hours, but in most cases borrowers will need several days or even a week or two to find, request and/or print out this paperwork.
Data Is Now Immediately Available
Fortunately, thanks to the fact that a great deal of data can now be found online, lenders are finding that needed information like tax returns, property value, homeownership, bank account information and more can be retrieved virtually instantly — and early on in the loan decision process. Because this sort of data can now be retrieved so much faster, it can shorten the time required to make a lending decision and approve a mortgage for the homeowner. Additionally, instead of placing the burden of gathering this data on the borrower, if the client gives full permission for the mortgage company to access data online, the homebuyer will be spared the responsibility and time commitment.
How the Right Data Expedites Loan Originations
The increasing willingness and ability for mortgage companies to proactively and digitally gather data is already having a positive impact on the industry. The cost of originating a loan has now decreased from $8,887 in the first quarter of 2017 to $7,774 in the second quarter. This amount includes the total amount of expenses associated to produce a loan, including commissions, equipment and compensation. In addition, the time it takes to close on a home loan has now been reduced nine days from the beginning of 2017. Employing digital capabilities and getting access to needed data as quickly as possible has definitely sped up the loan origination process. Digital mortgage loan originations are also inherently more convenient. Instead of requiring clients to come into a mortgage company in person to go over stacks of paperwork, mortgage advisors can now meet by phone and then email a secure link to the needed paperwork that the borrower can fill out and sign electronically. By not requiring a face-to-face meeting to get the loan started, and having quicker online access to needed data, applying for and being approved for a loan is now faster than ever.
Data Is Now Immediately Available
For busy prospective homeowners, knowing that many mortgage companies have entered the digital world comes as a relief. After all, we live in a world where we use our smartphones and the internet to get things done quickly and independently; many consumers expect the same from their mortgage company. Instead of relying on clients to request a huge amount of data, more mortgage companies should embrace the notion of digitally accessing property and borrower info to benefit both the industry and the homebuyer. This data is available via APIs, online services such as DataTree and forms that can auto-populate with a user's property information. Explore DataTee's extensive database today with a free trial.