It sounds ridiculous to even say this, but if we asked how you prefer to communicate with your friends, how likely would it be that you might say Blackberry Messenger? If you’ve always had iMessage or WhatsApp and have no idea what we’re talking about, it’s clear that this technology is extinct.
Just as BBM is a thing of the past, why do we accept that the technology for most paper-heavy home loans has not changed in the same amount of time. Let’s be clear: there is no longer a good reason for that. So are you ready to upgrade your mortgage the right side of the digital divide?
A Better Way
You might be asking yourself what a digital mortgage is anyway. Is it an application you fill out online? Is it an electronic document submission? Is it an internal process that saves time?
Digital mortgage is a loosely defined term that is highly misused. Many lenders have enhanced their process using one or two technologies and then claim to have digitized the process. They may have a quick application or even a portal for you to upload your documentation, yet they are not comprehensive in any sense. These are all useful improvements but are only components of the process.
To offer a truly digital mortgage it is imperative to consider the entire experience including the process that the application follows. Are the right questions being asked of the borrower? Is it clear how your assets and income factor in to your loan calculations? Can you digitally compare options and access a large scope of loan products?
Despite the introduction of a digital mortgage to the mortgage industry through the popularity of rushed pre-qualifications that often don’t hold up over time and online portals for document collection, you’ll often experience the same long, drawn-out process along the way once you’re in underwriting. That’s because the entire process has not been upgraded to reflect modern times. It’s like using an iPhone X but running software from the first iPhone – it just doesn’t work – at all.
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5 Primary Components of a [Smart] Digital Mortgage
- Digital Pre-Approval
- Digital Application
- Financial Data Linking
- Borrower Portal
- Real-Time Optimization & Underwriting
1. Digital Pre-Approval
Many lenders, including ourselves, offer a pre-approval or pre-qualification letter. This enables borrowers to begin the process of buying a home.
Despite the attractiveness of a quick pre-approval, it is critical to note that it does not mean your loan will be approved. While these are convenient tools for a buyer on the go, we caution borrowers not to rely heavily on approvals that are offered after so little due-diligence. It’s better to know as soon as possible if you’ll have circumstances that may limit your ability to qualify, such as alimony payments, errors in your credit report, or intricacies associated with self-employment.
Check out the Neat Capital Instant Pre-Approval– it allows buyers to make an offer, plus you can transfer over your initial data into our Platinum Pre-Approval when you have a few more minutes to ensure your loan is approved.
2. Digital Application (Electronic Document Submission)
This is where technology can really make a difference. You’ll find a wide array of “digital” applications ranging from simple online forms to dynamic, customized experiences. Along with the application, many lenders have gone paperless thanks to simple technology that enables borrowers to upload their documents to secure servers or applications. This electronic document submission technology not only saves time and space, but includes the added benefit going green and helping the environment.
Although these are powerful reasons to use electronic documentation, most lenders still are not using the full potential of a digital process. Some still accept mailed-in documents and faxes while others are receiving your data electronically but then manually reviewing each document as if you had dropped them off in a folder. Is that truly modern and digital?
3. Financial Data Linking
Since the popularization of asset linking with the advent of applications like Mint, linking your accounts to get updated data and confirm proof of assets, many lenders have jumped on board. This simple and secure technology mitigates human error and reduces much time spent collecting bank statements, paystubs, and income statements. The best part is, you no longer need to submit new statements every time you buy something new while applying for a loan, it automatically updates.
Note that while many accounts can be linked, across the digital mortgage spectrum, you will still have to download certain statements to show proof of assets and it does not work for static documents like a tax return.
4. Borrower Portal (with Real-Time Feedback)
Some home loan lenders offer borrower portals where you can upload documents and view the progress of your loan, but most portals do not offer control to customize your terms. A modern portal should offer the ability to edit your application, adjust your terms, and further customize your application.
To illustrate what we mean, here is an example of the Neat portal- where you can view different income and asset scenarios and loan options.
5. Real-Time Optimization, & Underwriting
Now the real difference comes when a digital mortgage is not simply collecting data in a digital format, but interpreting it and offering you the opportunity to make an informed decision. This includes accessing a wide scope of loan products through an algorithm, similar to what you do when you go to buy a plane ticket through an exchange, and not being steered to products that benefit a specific bank or person by limiting your search to one vendor.
With traditional mortgages taking an average of over 45 days to be clear to close, wouldn’t you prefer knowing if you’re approved weeks sooner? Most mortgage processes typically reflect a take-it-or-leave-it approach. You should not have to hand over sensitive personal data and then weeks for to find out you can’t afford the home you want and have a purchase fall through. By offering real-time feedback and support using top technology, you can find out sooner whether you qualify, and work with an in-house expert to clarify anything that may be holding you back.
A Modern Digital Mortgage
Without all components functioning together, is it truly a digital mortgage or just an online portal? The success metrics are how easy you found the process, especially if it’s not your first home and you’ve experienced the often frustrating alternative, how clearly it was for you to understand how your loan eligibility was determined, and how fast you received clear to close for your financing.
Don’t be the borrower who sits down with a banker when you can do the heavy lifting in 20 minutes from your bed in pajamas if that’s what you want.
Are you Getting the Digital Mortgage Experience?
If you’re working with a lender already, ask them if you’re getting all the components above, and if not, determine if you’re getting the information you need as quickly as you need it to make a sound lending decision. A digital mortgage is now so much more than an online application.
Much like phone chat systems of the past, it’s time to upgrade your lending experience and learn about the new tech you may not have even known was an option. If your experience is stressful, frustrating, and lacking in support specific to your needs – both digital and human – it’s likely you’re not getting the right type of a digital mortgage experience and it may be time to shop for a solution that leverages the best of technology.