Why speed matters: Mortgages and processing time
Business is all about creating efficiencies—both for the customer and the organization itself. When you’re efficient, you get more done, you solve more problems and you have happier customers.
This is never more true than in the mortgage industry. Most lenders are able to offer similar mortgage rates, but getting the buyer to the closing table quickly is where they set themselves apart. A borrower who can complete the financing of their mortgage can help win bidding wars and allow them to compete with cash buyers and institutional investors.
Yes, speed matters. Especially when it comes to mortgages.
Speed, efficiency and customer service
When you’re applying for a loan, your loan officer’s team will tell you how long the process will take and how many touchpoints it will require. Many of those expectations are measured in terms of transaction speed.
For example, preapprovals can now be issued not only on the same day, but within hours or even minutes. This means you can attend an open house at 10:00 a.m. and make an offer on that same property by the afternoon—a credible offer that demonstrates verified purchasing power.*
That’s not just accelerating the first step in approval, that’s turbocharging your lending experience so you can connect with sellers early on in the process—before the bidding wars begin. In today’s hypercompetitive housing market, early, proactive preapproval can be a difference maker.
Processing: The delay factor
However, without the aid of expert teams and powerful, error-reducing digital technology to speed things along, that life in your new home could be delayed. Mistakes can occur—costly processing mistakes that could jeopardize your closing date or even your purchase deal with the seller.
When it comes to closings, processing delays don’t always scuttle deals, but they can add unnecessary confusion and be a logistical nightmare for both sellers and buyers. Especially if move-in and move-out days are impacted. Smart lenders actively strive to anticipate problem points and provide succinct communication to ensure a smooth ride and a speedy approval.
A faster mortgage process
Historically speaking, there's no denying that obtaining a mortgage hasn't always been the quickest or easiest of processes. For decades, there seemed to be built-in frictions that consistently slowed the process down.
In all fairness, getting a mortgage is a big deal, and it takes time for professional teams to examine and verify all of the important details. Given the momentous nature of a home loan, most people understand the due diligence necessary.
As a borrower, you no longer have to settle for a “business as usual” approach. You have options. Lenders who embrace change in the form of cutting-edge technology, streamlined processing and improved communication have begun to separate. Turn times and speed matters to agents and sellers and superior customer service always has the last word with buyers.
A digital world = digital expectations
Think about how e-commerce has evolved over the past decade or so: You pay your bills online, have your groceries delivered with a few simple clicks and can order big-tickets items like cars and motorcycles online. If the rest of your purchases are defined by a seamless, digital experience, why would you settle for anything less when it comes to your mortgage?
Turn times: Challenges and developments
When it comes to the homebuying process, the faster you can move through the “buying” part, the more quickly you can get to the “home” part.
Key steps in the mortgage process include:
- Home inspection
- Attorney review
Home inspections and appraisals are absolutely essential to the homebuying process, and it may take some time to find the relevant expert—so plan accordingly. Meeting with a real estate attorney to hammer out outstanding issues (such as those discovered via home inspections) with the seller may also eat up some time. The attorney will help you negotiate and determine the cost of repairs, if applicable.
As far as appraisals go, your lender will want to ensure that the loan amount they are considering is equal to the value of the property. Only then will your lender proceed to underwriting and then finally closing.
Depending on the type of loan, the processing capacities of your lender and the complexity of your financial situation, things can proceed rather swiftly or endure a few complications along the way. On average, the entire loan acquisition process usually takes around 30-45 days to complete. This is your turn time.
As you know, getting a loan is not a trivial transaction that can wrap over the course of a week or two. One of the most important thing that needs to happen is your participation in providing the correct financial information. This is another area where a smooth, digital platform can make it easy on you to upload and share the necessary documents in moments.
Volume and processing
While the past year and a half have seen the mortgage industry set records for revenue and loan volume as interest rates have dipped to historically low levels, this good news has often been accompanied with a puzzling disclaimer that goes something like this: Due to heavy volume, there may be delays in approving your loan.
The timing of closing your loan matters. In addition to buying, you might be selling your place and need to move into your new home by a certain date. The lender’s high volume is not on your radar—you’re looking at timelines and how you need to seamlessly coordinate with multiple parties to wrap up a much larger process.
Digital Mortgage and real-world impact on loans
To meet consumer demands for greater speed and efficiency, many lenders are adopting innovative technology platforms that help process your loan more quickly and seamlessly. According to a 2018 report from the Federal Reserve Bank of New York, Mortgage providers with “fintech,” or financial technology, capabilities close loans 10 days faster than those who lack this technology.
Freddie Mac recently reported that the industry overall is becoming more efficient, with cycle times declining on average by 6 days over the last 5 years. Much of this success can be attributed to lenders like Proper Rate who offer a fully realized end-to-end Digital MortgageTM.
“The nice thing about Digital Mortgage is that it’s convenient, giving customers immediate access to real-time rates and the personalized products they need to begin the process any time of day,” says Guaranteed Rate COO Nik Athanasiou. “It’s so quick and easy to use that 90% of our business is now being conducted online through the Digital Mortgage.”
Fast, flexible, secure and available as an app, Digital Mortgage has proven to be a game-changing platform for loan applications and preapproval, integrating with automated underwriting system (AUS) software.
Faster preapproval means greater insight into purchasing power and more negotiating strength when dealing with sellers. It also accelerates final approval, getting you to the finish line on time with less anxiety so that you, the seller, the real estate agent and the closing agent are all aligned.
Introducing speed into the process
As illustrated above, pre-pandemic a number of savvy lenders were beginning to create an application process around cloud-based digital technology, but it’s become increasingly commonplace—first and foremost because borrowers are demanding it. According to a survey by a leading mortgage technology company, 61% of borrowers used an online application in 2020 and 61% of borrowers also took advantage of an electronic portal to sign and finalize closing documents.
Underwriting, automation and moving things along
Arguably the most important step on the road to closing your loan is the underwriting portion of your mortgage experience. This is where information regarding loan approval is examined, weighed and vetted—and it can be time consuming. An underwriter looks into your creditworthiness, scrutinizing your financial history and profile including income, assets, liabilities, employment history, collateral and more.
By incorporating the bold advancements of artificial intelligence (AI) and machine learning into mortgage processing, lenders are creating integrations and efficiencies that can be automated, saving mortgage providers countless hours on the backend that, in turn, can be passed along to the borrower.
While underwriters and their staff still play a vital role, this new, smart technology allows them to synthesize data from a range of parties—not just borrowers—more quickly and seamlessly, effectively eliminating errors, biases and bottlenecks attributed to an overreliance on manual labor, and delivering you a next-generation mortgage experience.
Mortgages and the human touch
As much as we celebrate the time-saving breakthroughs of modern technology, make no mistake about it: The human-to-human dimension is still imperative in delivering speed and precision. A loan officer is there for a reason—to help set expectations, guide you through the process and answer questions as you obtain the necessary financing to purchase your home.
While the verdict is certainly out as to what degree of involvement AI will play in the future of mortgages, experts still can make all the difference in the world.
A faster way to close
In the last few years, lenders who offer end-to-end digital mortgages are introducing added speed and convenience into the closing process. For many borrowers, this has been a game changer, giving them speed and simplicity.
A faster closing means no last-minute complications that could jeopardize finalizing the loan. It also means transformative convenience. In addition, many loans are dependent on co-signers, some of whom may not be in the same town let alone the same room. Digital closings solve this dilemma, right down to the online notary.
Once a source of great anxiety, closings can now be conducted from your laptop or smartphone thanks to a seamless and secure process that allows you to finalize the loan agreement from almost anywhere in the country (or wherever else you happen to be). Proper Rate’s e-Close and FlashCloseSM** technology is a leading industry example of how visionary technology can provide you with a simple, secure and succinct closing experience.
Speed and mortgages: Where do we go from here?
Like any other industry operating today, the mortgage industry will continue to evolve to serve you better and to be more efficient. As a homebuyer, you’ve doubtlessly become accustomed to doing many things online, including searching for homes and exploring neighborhoods. But the technological advances in the industry are not just to make life easier for you. They help speed up the financing process, to give you an advantage and hopefully allow you to win that bidding war and close on the home you really want. Faster, and with fewer headaches.
*Applicant subject to credit and underwriting approval. Not all applicants will be approved for financing. Receipt of application does not represent an approval for financing or interest rate guarantee. Restrictions may apply, contact Proper Rate for current rates and for more information
**Closing eligibility requirements still apply (e.g., property, state, loan criteria, etc.)
***Not eligible for all loan types, or investors. Eligible for primary, 2nd home and investment properties. Title company restrictions may apply, not eligible for HFA programs. Full eClose is not currently eligible in California, Connecticut, Delaware, Georgia, Maine, Massachusetts, Mississippi, New York, North Carolina, Rhode Island, South Carolina, Vermont, and West Virginia.