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   ARTICLE   |   From Scotsman Guide Residential Edition   |   November 2015

Consumer Demand Drives Mortgage Innovation

Technology promises to make the homebuying process faster, simpler and more transparent

r_2015-11_Bhat_spotToday’s consumers increasingly demand technology innovations that allow them to shop online for big-ticket items like cars and homes. But although car buyers don’t even have to get off the couch to close the deal on a vehicle, most consumers can’t enjoy the same convenience when it comes to securing financing on their most important purchase: a home.

In a tightening housing market, where buyers are becoming more aggressive, engaging in bidding wars and seeking speedier closings, many mortgage originators are still operating in the archaic paper-and-fax world that can grind the process to a slow crawl.

Given the state of the housing market (especially the declining refinancing market) and the need for loan originators to remain competitive and relevant, the time has come to finally consummate the marriage between technology and the mortgage industry.

Simple, fast and clear

In all facets of our economy — whether it’s retailers, service providers or direct-to- consumer companies — unparalleled focus is being put on delivering an exceptional consumer experience. New technology innovations compliment that effort. By bringing a higher measure of simplicity, speed and transparency to the mortgage process, technology can help assure a high level of customer satisfaction.

  • Simplicity. One of the greatest inconveniences for consumers applying for a mortgage is the need to provide scads of paperwork — W-2 statements, credit reports, pay stubs, income-tax returns and bank statements. It eats away at a borrower’s patience as well as the speedy timeline they’re looking to meet. The online technology products that are in use now, and evolving, help eradicate this pain by providing a way to pull consumer information that is already digitized on other platforms. For instance, many human resource departments have digitized payroll systems that make it possible for data to be transferred directly to a mortgage application, taking the legwork out of the process for the borrower as well as the mortgage originator. And, of course, this can all be done from the comfort of the home, meaning the customer doesn’t have to run multiple errands gathering up the information.
  • Speed. What’s important to home sellers is that prospective buyers can actually close on the purchase of their home — and, in most cases, the quicker, the better. So if a seller has to pick between a buyer who is just starting the mortgage-approval process and one who is already pre-approved, the choice for the seller is easy. A speedier mortgage application process enabled by technology will help level the playing field because it won’t take weeks to obtain a pre-approval. Buyers can begin looking as soon as they decide to buy a home, knowing a loan approval (or rejection) is imminent and not bogged down in paperwork purgatory.
  • Transparency. Above all else, today’s savvy consumers want to be reasonably sure that they’re getting the best home-purchase deal out there — or at least a fair one. The way mortgage companies conduct their business is as important as the products they’re offering. The mortgage-tech innovations that will gain the most traction will be those that provide the highest level of process and deal transparency. Consumers want access to a competitive marketplace that allows them to make informed choices about products and services, instead of having those choices made for them by their mortgage originator or real estate agent.

A new day

The time is now to provide homebuyers with the online tools they need to research the best options for obtaining a mortgage. They should have access to the technology required to make applying for a mortgage fast, efficient and, most of all, simple. This sort of technology is in play today, and we’re seeing an upward trend in innovation, especially on the mobile front. In fact, one could argue that the mortgage industry is on the verge of a revolution.

Mortgage originators are playing catch-up
with the tech-savvy buying habits of millenials.

But there’s also an argument for the tech revolution to advance even more quickly. Why is that so necessary? For the past decade, baby boomers were the mightiest demographic in the land. As they went, so did the economy. But, today, something new is happening: The millennials have arrived. As a group, they are affecting in a major way not only how homes are being sold, but to whom they are being sold.

Millennials — those born between the early 1980s and 2000 — are now the largest demographic group in the country, according to the U.S. Census Bureau. Add to that the fact that baby boomers have long since settled down, started families and purchased their homes, and it’s clear that homebuying demand is shifting to a new generation.

Mortgage originators are playing catch-up with the tech-savvy buying habits of millennials — now their largest block of potential customers. And the demand for technological innovation in the mortgage industry will only expand in the years ahead as this new wave of first-time homebuyers moves into the home-purchase market.

This is not to say that mortgage originators haven’t recently engaged with their customers online. They have, and they continue to do so. Many originators’ websites today have an electronic version of Form 1003, the industry standard mortgage application. The issue, of course, is that once this form is filled out online, borrowers are often left to navigate the rest of the process without guidance — and without the most helpful tools that technology can now offer.

Help is on the way, however. For the past few years, some companies have been developing new digital tools that make it possible for borrowers to have a largely paperless home-financing experience. These tech innovations help borrowers to manage the process of searching for and actually purchasing a home. But it has not been until recently that the growing demand for new technologies and the nearly universal access to mobile broadband have lined up to create the perfect opportunity to push innovation forward even faster in the mortgage industry. 


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