As with most aspects of our lives, the entire process of purchasing a home has been revolutionized by technology. According to a joint study from The National Association of Realtors and Google, 90 percent of potential buyers use the internet to find and compare houses. While realtors were quick to jump on the virtual bandwagon to take advantage of the booming market, it’s only in the last few years that the mortgage industry has established a solid online presence.
Thanks to the internet, consumers now have on-the-spot access to rates, applications, and valuable information on the refinancing process. And while fewer trees are being sacrificed for the sake of paper forms, technology has changed the refinancing process in other ways, too.
Speedy isn’t a word most people would use to describe the refinancing process. You see, the mortgage system is document driven, meaning applicants spend considerable time poring over and completing dozens of forms. They have to chase down old financial records and documents, and then scan or fax them to their lender. Lenders often end up requesting extra documentation at the last minute, creating a back and forth that adds weeks to the process. Traditional refinancing can take months to close.
However, now that so much of the process has moved online, the vast majority of the forms can be auto-filled with required information. This not only streamlines the process for homeowners, it also simplifies collection and verification for loan officers. And as electronic closings become more common, it will mean that everything (save the appraisal) can be handled virtually — eliminating weeks of processing time.
As previously mentioned, there is a tremendous amount documentation required for refinancing, and especially so for the closing process itself. By bringing that documentation online, the process becomes much clearer. Homeowners can see all forms, records, and files needed for their refinance from the get go, allowing them to prepare accordingly.
Digitization also ensures that lenders can easily keep up with federal regulations by tracking the delivery and receipt of controlled documents, such as the Loan Estimate and Closing Disclosure forms. The ability to access and send documents whenever they're needed is an added bonus, as it means homeowners are never left sitting idle.
When lenders pay employees to translate documentation requirements into emails, digitize paper files, and tracking requested and received paper forms, that expenditure is passed on to borrowers in the form of increased fees. Taking advantage of modern technology and automating all possible tasks greatly reduces these costs, and saves money for both the borrower and the lender.
Technology can’t take the place of experts, but it can speed up the refinancing process, reduce errors, and diminish reliance on human capital. Lenders in turn can increase their efficiency and pass the savings on to consumers.
Now that the mortgage lending industry has finally joined the technological age, the refinancing process is far more intuitive than ever before. As innovation continues to improve lending industry systems, and lenders dedicate more resources to enhancing the borrower experience, we may one day see refinancing become a one-click process.