Technology is transforming the mortgage industry in ways that weren’t imaginable decades earlier. New advancements in predictive analytics, machine learning, and big data have created a wealth of opportunity for new innovators.
New tech, however, isn’t that cause of the rapidly evolving mortgage process, but rather a product of consumer expectations. Millennials are in their prime home-buying years and are showing strong preferences towards a mortgage process that can be completed anytime, anywhere, and with the best possible rates.
- Digital technology is transforming the mortgage process to meet evolving consumer expectations
- Millennials and other young buyers prefer an online mortgage process that is easily understandable and saves time
- Many lenders are struggling to adapt to these rapidly changing consumer expectations, especially after a decade-long era of mostly refinances
Until recently, the mortgage process has seen little change from the process 20 or 30 years ago – slow, inefficient, complicated, a mountain of paperwork and requiring manual intervention at every step from application and processing, to underwriting and closing.
Add to that an industry culture that is still emerging from a historic downturn so lengthy that many professionals have never experienced a normal mortgage market.
After a decade in which most new lenders in the industry performed refinancings almost exclusively, today these crisis-era mortgage professionals are seeing a rising tide of purchase originations for the first time. Moreover, the customers now include an abundance of first-time buyers. This combination of new business and new customers is creating an opportunity to ask questions and rethink the way things have been done for generations.
First, cost. Right now the average cost to originate a mortgage is close to $9,000 per loan, according to the Mortgage Bankers Association. Many disparate systems and manual labor are the key reasons for such high cost. Just by automating many of those manual tasks, the cost would drop significantly.
Second, why does it take so long to process a mortgage? Usually a customer has to plan on weeks, if not months, for the processing of a mortgage — an anxious time for homebuyers. Digital processing should be able to reduce the turnaround time from origination to completion dramatically – from months to days, and eventually hours.
And third, why can’t consumers get the process started any time they want? The desire for a mortgage does not limit itself to business hours. Consumers want what they want when they want it. That means 24/7 access to service, with or without human intervention, and on any medium, with as little data input as possible. This suggests an entirely new customer-engagement model.
View the original article at Housing Wire