Doug and Melanie Sedam
We are in the midst of an extraordinary year that has seen a surprising turn in the mortgage industry. The fact that the COVID-19 pandemic has had unprecedented economic impacts does not need to be overstated. In the case of mortgage financing especially, record low rates have led to extraordinarily high rates of purchase and refinance mortgage applications.
Mortgage professionals will agree that there is one overarching problem with the refinance process as it currently stands; it just takes too much time. It is a cumbersome process that requires constant surveillance. Further, in the midst of this mortgage financing boom, lenders and loan officers are swamped. As rates fall, loan officers are struggling to process the countless home loan applications that come their way. Borrowers want to take advantage of the rates and save their money as quickly as possible.
This is where automation comes in. Automating aspects of the mortgage finance processes will, among other benefits, greatly enhance the productivity of loan officers. Complex documents like W-2s and bank statements can be unpackaged and processed within minutes. Multiple applications can be worked on simultaneously.
In the last housing bust, Fannie Mae and Freddie Mac caught some flack after their attempts to automate income documentation left loopholes that could be taken advantage of. This can, and has, created some lingering distrust for automation. However, algorithms have evolved since then. Their very nature is that they get stronger as time passes. They have an immense role to play now, when housing is booming.
It was found that for every 100 steps in the loan approval process, humans are likely to make 10 errors while carrying out even redundant work. Automating the mortgage financing process greatly reduces the error rate. Automated underwriting processes also require little or no training and can rapidly produce work that is error free.
This is especially apparent in the matter of an appraisal. Automated appraisals save costs for borrowers and ultimately speed up the mortgage process. Through the use of data analysis software, automated appraisals determine valuations in seconds. They are faster, save more money, and make for increased accuracy when compared to conventional appraisals. They are one step of the process that, if made more efficient, can greatly benefit the whole. Several of the mortgages that The Home Loan Pros are currently processing for clients, who live here at SaddleBrooke Ranch, have received appraisal waivers, i.e., no physical appraisal has to be done, and the client saves several hundred because of these new automated processes.
The mortgage banks are slowly initiating other automated mortgage underwriting processes that will further speed up the processing time on mortgages. Being that overall, equity in homes is the highest it has ever been, and with rates at historical lows, automated underwriting will become standard working procedure and homes loans will, from start to finish, take just days instead of weeks on end.
Melanie Sedam is the owner of The Home Loan Pros and is licensed in both California and Arizona. Melanie can be reached at 520-829-5219, ext. 2 should you wish to discuss how a home mortgage could work for you. The Home Loan Pros is an approved Conventional, VA, FHA, and a Reverse Mortgage Broker with stellar reviews and very aggressive interest rates. Get started with your home mortgage application today by calling Melanie Sedam at 520-829-5219, ext. 2.