New technology has revolutionized multiple long-winded processes in our lives. The mortgage industry is no different.
But how is technology used in the mortgage application process?
Technology is now embedded in every step of the mortgage process. This is especially the case since the pandemic, when lenders were forced to adopt more digital-friendly processes.
Does that reduce the need for human input when applying for mortgages? Not entirely. Applying for a mortgage still requires a degree of human input. In fact, we think a mixture of technology and human processes is the best of both worlds.
How technology can make the mortgage process smoother
Client benefit: In the past, you would meet with a loan officer in person to sign the necessary paperwork. That means scheduling time to commute to the office location during business hours. Now, clients have the flexibility to sign at any hour and in any location.
In recent years, the use of electronic signatures has increased. Many lenders have become more forgiving over the need for “wet signatures.” This significantly speeds up the mortgage application process across advisors, brokers, and lenders.
According to The Financial Reporter, digital signatures speed up the process and increase scanning efficiency, leading to far fewer errors.
Digital signatures reduce the risk of scanning errors by 92%, increases audit efficiency by 80%, and reduces the likelihood of missing files by 66%.
Application Programming Interfaces (APIs)
Client benefit: APIs help industry software programs sync information and data. With APIs, we can improve workflow automation to speed up the process. For example, we can connect our loan system to credit scoring agencies through APIs. This allows us to quickly and accurately determine loan eligibility.
A survey from Fannie Mae’s Mortgage Lender Sentiment Survey found that APIs are “the top technology with the greatest potential to streamline business processes.”
APIs act as efficient bridges between platforms that allow data to be shared openly and accurately. This reduces the need for long-winded data migration, which has the potential for error or could be lost along the way.
Robotic process automation (RPA)
Client Benefit: Our Quickstart application is a great example of RPA. For instance, if you’re a military client, our application will adjust to ask questions specific to military home buyers versus the average home buyer. This process eliminates the need for unnecessary questions for buyers that are not military and helps prevent potential errors in documentation.
Some of the bigger lenders out there are also turning towards RPA to reduce their operational costs, increase productivity, efficiency, and accuracy.
RPA can help to replace all those repetitive or rule-based tasks that are better handled by automation than done manually.
Tasks that work well with RPA include application processing, quality control, and loan origination. RPA can help spot errors in the loan origination process, leading to faster approvals and happier customers.
A comprehensive online experience
Client Benefit: No client enjoys navigating a poorly designed website. We’ve worked hard to ensure that our mobile experience is up to par with our desktop experience. We’ve also invested time and money into creating content, calculators, and resources on our website that helps answer our client’s most burning questions.
Lenders who take digitization seriously now provide a much-improved experience online. It’s not uncommon to see websites with mortgage calculators, online applications, online chats, digital document uploads, and mortgage application status checkers.
Client Benefit: Blockchain technology helps streamline the storage of client records and information. Think of blockchain as an editable database on steroids.
Some lenders and fintech startups are exploring the use of blockchain to update aging backend technology.
One possibility people are looking at includes a way to record ownership and title data on encrypted blockchain ledgers.
This could help to streamline the mortgage process and even eliminate the need for title insurance. Lenders who adopt blockchain in the future could provide options with much lower closing costs. This could create more competition and choice in the mortgage industry.
Automation and machine learning
Client Benefit: Potentially reduces the amount of human error.
According to the FHFA, 18% of those applying for a mortgage are asked to redo paperwork during the application process.
A popular solution is the use of automation and machine learning to automate data collection from applicants. In a process that cuts out the need for human interaction, this can reduce the likelihood of human error in the application process.
Is technology the only way forward?
There’s no doubt that technology will continue making the mortgage application process smoother, faster, and more accurate. But what about the human element? Is there still a need for it?
We believe that a dual approach is always best, using technology but not forgoing the human element entirely.
While some people do prefer an online-only, automated experience, applying for a mortgage is an enormous financial commitment and many will prefer to speak with a human about it.
The same goes for those who wish to get mortgage advice from a lender or broker. So far, technology has not managed to replace that process entirely. Technology can provide automated answers, comparisons and recommendations, but what people typically want is tailored advice from someone with experience and knowledge about the industry. That is harder to replicate, no matter how advanced technology becomes.
That’s why there will always be a need for human intervention in the mortgage industry. It’s not a case of technology vs. humans but rather technology complementing humans and making the experience more streamlined for everyone.
OVM Financial makes use of some of the technology mentioned above to speed up and streamline the mortgage application process.
With OVM, you can get pre-approved for a loan in as little as 15 minutes. We don’t just rely on tech though, we have an assigned loan team to help you every step of the way.
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