As the digital revolution takes the mortgage industry under its wing, lenders are compelled to go digital to tackle issues such as financial burden, workflow inefficiency, etc., and streamline the processes to offer better borrower experience and the best mortgage refinance rates. However, turning digital in a short span is tough. With technological investments, closing costs shoot up and lenders expecting quicker closing time can only experience a few days cut off. Furthermore, cyber security risks also need to be neutralized.
Despite this situation, lenders are steadily marching towards digitalization by embracing things like specialized mortgage software and AI, which is supposed to completely change the mortgage world by 2020.According to topics addressed at the Mortgage Bankers Association Technology Conference held in Dallas, Texas, on March 24-27, here are the 3 things dictating the direction of digital mortgages:
Digitalization in the mortgage industry is focused on offering a smooth borrower experience as well as the best mortgage refinance interest rates. However, it’s doing the opposite for lenders. With technology investments, closing costs rise. Considering this increased cost to close, borrowers usually turn their back and head to lenders who use conventional methods. In an already financially restricted industry, lenders are forced to get creative to lower closing costs and this is certainly a lot of pressure.
Adapting to evolving technology is good. But utilizing technology throughout the process is more efficient and often necessary. The problem is, lenders do not try to solve problems gradually. Instead, they try to solve multiple issues with a single tool. Though one tool may be helpful in extracting data, it may not help curb other issues.
For a successful implementation strategy, a go-to formula is: identify a problem, see if you have sufficient data to tackle it, and then decide which digital tool to use.
One of the factors that determine a smooth customer experience is quicker closing time. Though efforts are being made in that pursuit, the fragmented nature of the mortgage industry restricts these efforts. As a result, the average mortgage loan closing time fluctuates. However, it has been significantly shaved off in the last few years but lenders are trying to further reduce it.
The average closing time after digital advancements is one of the heated topics in the mortgage world and the one that has been holding back progress.
Mortgage industry while going digital has its challenges that need to be addressed. However, initiatives are being made to curb them and streamline the process for better customer experience.
As a consumer considering a refinance, always consult with your existing mortgage loan servicer to ensure you have all the facts about your loan. It’s the only way to know you have made an informed decision should you decide on another lender.