In 2022, it might seem like everything is going digital. Many of the jobs once tied to the office now take place in a digital workplace. Daily communication between friends and family has shifted, too, towards a primarily digital format. The latest amenity to go digital might surprise you – mortgages. As more people search for their next home online and reach out to realtors online, this is a natural progression. Shopping for a mortgage online is easy, convenient, and advantageous to buyers, so it’s time for mortgage lenders to get onboard. While the impending dominance of algorithms might be frightening, digital mortgages can offer lenders a range of benefits.
What is A Digital Mortgage?
A digital mortgage is essentially exactly what it sounds like – a mortgage product that is primarily offered, underwritten, and serviced through a digital platform. These mortgages utilize artificial intelligence and machine learning to eliminate many of the manual processes previously required to approve a mortgage. Rather than relying on a human underwriter to apply an approved formula to an applicant’s documents, a digital mortgage turns that formula into an algorithm and makes the underwriting process completely automated.
Other unique features of a digital mortgage include faster closing times, lower closing costs, and in many cases, higher customer satisfaction. Another benefit is the environmentally-conscious elimination of paper. While a traditional mortgage would typically require physical signatures completed in person, a digital mortgage allows for electronic signatures and zero paper waste. These benefits make it clear that digital may be the superior option.
How Do Marketing Trends Impact Digital Mortgages
You might wonder – are digital mortgages just a marketing gimmick? Are they merely the result of the hype surrounding artificial intelligence? While digital mortgages indeed offer an element of novelty, they’re based firmly on increased demand for products that are accessible and manageable from the web. Customers are no longer willing to make the trip to an office to complete a task that could be done online. Technology has recognized this trend as more products and services are available online.
It’s true, though, that marketing trends have played a part in the development of digital mortgages. While consumers may have previously doubted web-based products, research indicates that many consumers now prefer them. Similarly, older consumers often prefer in-person interactions, whereas younger borrowers would rather communicate via a mobile device. Trends like these continue to inform digital mortgage products and offer insight into the future of the mortgage industry. Lenders can remain competitive by paying attention to marketing trends and responding with services that meet customers’ needs.
Why Are Digital Mortgages Vital to Lending?
Digital mortgages are still a developing innovation, so that many lenders might dismiss them as a trend. However, their popularity indicates that they’re here to stay – and they may eventually take over as the dominant form of mortgage lending. Given the trajectory of marketing trends and consumer behavior, this proves that digital mortgages are essential to the industry’s growth. In a few years, lenders who don’t offer digital products will likely see a sharp decline in their profits.
Customers aren’t the only ones benefiting from these products, though. Digital mortgages are vital to lending because they streamline the underwriting process. Underwriting for a mortgage, when done manually, can be an incredibly time-consuming process. The human staff members who complete this process must be paid, which means it’s also quite expensive for a mortgage company. This ultimately amounts to wasted time and money for a company when an application is declined, but automation can eliminate this risk. Algorithmic underwriters do not require a salary, and they minimize the risk of lost revenue while reducing your company’s overall expenditures.
Preparing Yourself for the Future of the Mortgage Market
The future is in sight, and it includes digital mortgages. Whether or not you’re on board, the change is impending, and you can stay ahead of the curve by preparing for it now. Transitioning from a manual process to a digital process is always challenging, and you don’t want to wait until all of your competitors have made the switch. You can start adopting a digital mortgage framework by gradually shifting lending processes to an online platform. Most lenders allow online applications, for example, and online submission of supporting documents.
You can also encourage your customers to complete borrower tasks online. If you have a question for a borrower, you can send it in an email rather than making a phone call. This can help acclimate customers to an online communication model that eventually supports a fully digital mortgage product. Perhaps the most crucial step of preparation, though, is to invest in education. A digital shift will be a significant change, and readying your staff is a great way to make the transition smooth for everybody involved.
As long as there are houses for sale, customers will be looking for a mortgage. If you want to be their lender, you need to offer cutting-edge products. In 2022, that means digital mortgages. As more processes shift into the digital world, mortgages are no exception, and this change can be beneficial for lenders and borrowers alike. It’s important to anticipate these changes, though, and start planning for the future demands of consumers. It’s never a good idea to wait until future trends become apparent.
Lenders can start making the change by adjusting to consumers’ needs and online transitioning elements of the mortgage process. Improving access via mobile applications can also be an asset as the digital shift progresses. This, coupled with reduced costs and streamlined underwriting, promises to make digital mortgages a promising innovation. Investing in the future will help mortgage lenders stay ahead as digital lending moves unfold.
Learn how to leverage digital tools to make your mortgage lending business stand out from the rest.