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Digital Lending Moves Into the Mortgage Industry

Digital Lending Moves Into the Mortgage Industry
(Robert Hyrons/Dreamstime)

By    |   Wednesday, 18 April 2018 06:05 AM

For centuries, loans and mortgages have been sourced from local banks, credit unions, and financial institutions with brick and mortar presences.

However, the rise of the internet has made the average person more comfortable with the idea of handling important financial transactions online and paved the way for growth in digital lending.

We’re seeing significant growth in online mortgage lending – a trend that’s driven by significant advances in technology.

Online lenders were once viewed as alternative options that people only pursued when they got turned down by banks or didn’t meet the criteria from brick and mortar financial institutions. However, this is no longer the case. Whether it’s a reverse mortgage or repayment mortgages, online lenders are no longer simply filling a void – they’re creating and satisfying demand.

Online mortgage lenders are all highly competitive in the larger home loan industry. Not only are they delivering competitive rates, but many circumvent the complicated pre-approval processes that traditional lenders require and approve people in just minutes or hours.

The efficiency and effectiveness of online lending is thanks, in large part, to advances in critical pieces of technology, with artificial intelligence (AI) being one of the more interesting innovations.

“Chatbots – AI-empowered platforms that simulate a conversation with the user – will be the primary way in which AI revolutionizes the mortgage industry,” mortgage expert Steven Weitzman writes. “These chatbots will be able to extract basic information from borrowers and assist them in verifying their eligibility, getting rate updates, and calculating loan amount estimates. Chatbots can also act as a screen between borrowers and lenders, saving borrowers from wasting time and allowing lenders to weed out customers that they aren’t fit to help.”

Unisource is one company that’s already using machine learning and AI to provide mortgage and real estate agencies with tailored lending solutions. When asked about the tangible benefits, CEO Michael Cohen says, “There is less human error, and a larger workload can be completed in less time. This drastically reduces costs for us to produce documents, such as reports, which is then transferred into savings for our customers.”

From a loan processing point of view, the industry is also seeing some growth in terms of platforms that automate the process without compromising on accuracy. Speaking of data, one of the traditional pain points in the industry has been a lack of standardization from one company or lender to the next. As a result, borrowers often have to jump through hoops when it comes to evaluating different loan products.

Moving forward, we can expect to see more standardized data. This will facilitate better communication between all parties involved in a transaction. From the lender’s point of view, it’ll increase efficiency and reduce the margin for error that can result from translating datasets.

At the end of the day, the virtualization of mortgage lending practices yields many benefits to both the lender and the borrower. There’s increased transparency, faster approval processes, fewer human errors, and less time wasted hunting down mortgages that won’t work. In this sense, the technology behind online lending is creating better borrower experiences, which enhances brand reputation and promotes greater satisfaction between the various parties involved.

The online mortgage lending industry is nowhere close to flattening out. There is room for tremendous growth in the next 12 to 36 months and consumers should expect there to be several shakeups. From fintech companies forming partnerships with banks to approval processes becoming more efficient, the future is brighter than ever.

It’ll also be important to keep an eye on cyber threats and how fintech companies invest in various security technologies as a way of preventing costly attacks that threaten consumer privacy – which is paramount to the integrity of the mortgage approval process.

Presently, this is the only credible threat standing in the way of massive growth and marketplace adoption.

Richard Agu is a researcher, entrepreneur and freelancer, passionate about entrepreneurship and self-development. Currently, Richard writes for Entrepreneur.com, Goodmenproject.com, among others. Follow him on Linkedin.com by clicking here now.

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The efficiency and effectiveness of online lending is thanks, in large part, to advances in critical pieces of technology, with artificial intelligence (AI) being one of the more interesting innovations.
digital, lending, mortgage, online, home, loans
Wednesday, 18 April 2018 06:05 AM
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