Technology has changed everything about how we live our lives. From ordering takeout to dating and banking, there always seems to be an app for that.
What you might not realize is that financial technology (fintech) has changed the way we buy homes and get mortgages, too. Here are eight ways that technology has changed the mortgage process:
1. Powers Your Research
Research is key when it comes to the home buying process. And thanks to tech, doing that research is easier than ever. You can compare bank and non-bank mortgage lenders and rates at the click of a button. You can also:
- See how interest rates and loan terms may be affected by:
- Credit score
- Down payment
- Rate type (fixed or adjustable)
- Loan term
- Choice of a conventional, FHA or VA mortgage loan
- Account for additional homeownership costs, including:
- Property taxes
- Homeowners insurance
- Mortgage insurance (MIP or PMI)
- Homeowner association fees
2. Improves Your Mortgage Education
Because the digital mortgage process is self-guided, you can learn about home buying and the mortgage process at your own pace. The benefit? As you look for homes and prepare to apply, you become a better-informed home buyer. It will help you understand how to spot a great deal as a first-time home buyer and when you make future home purchases.
3. Streamlines the Mortgage Process
Mortgage lenders know that they have to work harder to compete for your business. That’s why they’re using cutting-edge technologies, like artificial intelligence and machine learning, to streamline the mortgage process with user-friendly tools:
- Application forms that automatically populate key information, like your name, address and Social Security number
- Easy upload features that allow you to instantly submit tax returns, bank statements and income documentation
- Verification tools that check your income and employment with credit agencies in seconds
4. Gets You Help When You Need It
Lenders know that you’ll have questions throughout the mortgage process. That’s why they’re embracing online tools with instructions and answers to frequently asked questions right into the application forms.
This makes the mortgage process easier than ever for you to navigate. And if you need a little extra help, thanks to digital chat boxes and round-the-clock call centers, you can get the answers you need whenever you need them.
5. Gets You Approved Faster
Lenders who use digital technology can speed up the process to review and approve mortgage applications. They can get the job done in less time and with fewer mistakes. This saves lenders time and money, and they can pass that on to you in the form of lower closing costs.
6. Reduces Bias
The history of mortgage lending in the U.S. has been far from equitable. For many years, government-approved practices, like redlining, restricted where African Americans and other communities of color could get approved for a mortgage.
This practice priced them out of many communities and made it harder to build generational wealth for their families. The legacy of those practices affects those communities to this day.
Online mortgages have created greater opportunities for LGBTQ and BIPOC communities to qualify for affordable mortgages by lowering the barrier of conscious and unconscious bias.
The online mortgage process can consider a wider range of factors than human loan officers. A greater understanding of a mortgage applicant’s financial potential can be reviewed without the blinders of personal or institutional biases.
7. Works With Your Schedule
For most home buyers, time is your most valuable asset. If you work odd hours, don’t spend your day at home or in an office, or just have a hectic schedule, you probably don’t have the time to meet with loan officers, speak with a mortgage broker, dig through your files or sign paperwork.
The online mortgage process lets you get these things done in less time and when it’s most convenient for you.
Even closings and other aspects of the mortgage process that traditionally required home buyers to appear in-person are increasingly done online.
8. Saves You Money
In the past, getting a mortgage required lots of paperwork, postage and face-to-face meetings with lenders, usually at their bank or office.
With online mortgage applications, you can get a mortgage without ever setting foot in a bank, not to mention spending any money on toner cartridges or waiting in line at the post office. The online route saves you time and money, which you’re going to need as a new homeowner.
Ready to start your home buying adventure? Even if you work with a traditional mortgage lender, like a bank or credit union, technology will be part of the process. And as these mortgage technologies develop, you’re going to see even more advancements that will make it increasingly easier to get a mortgage – on your terms.
Freddie Mac. “Mortgage Closing Cycle Time.” Retrieved December 2021 from https://sf.freddiemac.com/content/_assets/resources/pdf/fact-sheet/mortgage-cycle-time-benchmark-study.pdf