Digitize mortgage loans for fast transactions
In response to consumer expectations, digitization and faster payouts are becoming the new normal in many industries. Just as digital payouts are replacing paper checks, manual processes involving paperwork are being replaced by online self-service tools that speed up the loan and mortgage approval process. While the actual money transfer may end up being instantaneous, if the entire process takes weeks, the final payout will not appear instantaneous to the consumer.
Digital Mortgage Bank Better Mortgage was founded after CEO Vishal Garg‘s frustrating homebuying experience in which he and his wife missed out on their dream home after weeks of nibbling through the mortgage process, phone calls and paperwork sent through the mail.
Another buyer with available funds was able to overtake the couple and close the home. This forced Garg to develop a mortgage process that allowed borrowers to compete in a seller’s market. Today, the company is working to cut the mortgage approval process from weeks to minutes.
“Better has digitized the entire mortgage process to eliminate fees, unnecessary steps and time-consuming appointments,” he said Ziggy Jonson, Head of Financial Products at Better Mortgage. “Instead of the traditional manual and paper-based experience, customers can upload and e-sign documents, receive credit estimates in seconds, and receive a pre-approval letter in just three minutes.”
Keep costs down and keep customers happy
However, securing a home requires more than just pre-approval. A motivated seller can choose a buyer who can transfer the money to them immediately, as was the case with Garg.
Additionally, a buyer with cash can have an advantage over a buyer seeking a traditional mortgage if the mortgage company doesn’t act quickly enough. Jonsson says Better Mortgage’s clients can close escrow 10 days faster than the industry average.
“Online lenders offer customers more transparency and speed,” Jonsson said. “At Better you will receive a personalized price offer – [a] Loan Estimate – in seconds, pre-approval in just 3 minutes, and no processing or lender fees.
“Lenders that aren’t online have to do a lot of paperwork and do it by hand and that’s why their turnaround time is typically 45 to 60 days to approve and process a loan. Better’s entire process is online from start to finish, so our turnaround time for a single family home is three to six weeks.”
In addition to paperwork and phone calls, traditional mortgage processes involve fees and expenses to cover the work that goes on behind the scenes. By eliminating much of the work associated with a traditional mortgage, a fully digitized platform also lowers costs, ultimately saving borrowers money that can be used to buy a home, Jonsson said.
“By eliminating commissions, our borrowers save an average of $3,500 in fees on each loan, allowing people to choose better areas with better schools or more convenient commutes,” he said.
Not every step of buying a home with a mortgage can be done in a mobile app, but even those processes can be made faster and more convenient with digital integration and a centralized customer interface, Jonsson says.
As the primary point of contact between borrowers and lenders, a digital interface must also be intuitive and provide a centralized platform for borrowers to navigate and find information on the status of their mortgage applications.
“Customers can use our digital platform to schedule phone calls,” said Jonsson. “We have tracking tools that let customers know about the progress and all the steps they need to take, much like FedEx notifies customers about a package shipment or Grubhub about pizza deliveries.”
The digital future of home buying
As the industry continues to evolve and adapt, Jonsson said Better Mortgage’s streamlined approach is likely to become more widely adopted. He believes that buying a home will become a fully digital transaction, similar to what consumers are now experiencing when ordering groceries through Instacart or everyday items on Amazon.
“Technology now makes looking for and buying a home more convenient. Post-pandemic, leaders will be those offering streamlined, digital home finance,” Jonsson said. “According to the National Association of Realtors, millennials — many with young children — are the largest group of homebuyers today, and their preference for digital natives will shape home buying for years to come.”
As with other financial services, borrowers expect to open an app on their phone and instantly know what’s happening with their mortgages. They want to find relevant answers to their questions and feel that their requests and requests are moving forward.
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 these positively by providing a clear roadmap. Regardless of how quickly funds are withdrawn, consumers won’t feel the benefit of faster withdrawals if they’re bogged down in the process that gets them there.