Real-time home loan disbursements are of little use if the estimate and approval processes surrounding them are still stuck in manual. In the Expanding Payments Choice Playbook, Better Mortgage’s Ziggy Jonsson explains why digitizing and automating the entire application process is key to instant loan payouts.
In response to consumer expectations, digitization and faster disbursements are becoming the new normal across many industries. Just as digital disbursements are replacing paper checks, manual processes involving paperwork are being replaced by online, self-service tools that speed up the approval process for loans and mortgages. While the actual transfer of money may be instant in the end, if the overall process takes weeks, the final disbursement will not seem instant to the consumer.
Digital mortgage lender Better Mortgage was founded following CEO Vishal Garg’s frustrating homebuying experience, in which he and his wife missed out on their dream home after weeks of navigating the mortgage process, phone calls and paperwork sent through the mail.
Another buyer with funds in hand was able to get ahead of the couple and close on the home. This compelled Garg to create a mortgage process that enabled borrowers to compete in a seller’s market. Today, the company works to streamline the mortgage approval process from weeks to minutes.
“Better has digitized the entire mortgage process to eliminate fees, unnecessary steps and time-wasting appointments,” said Ziggy Jonsson, head of financial products for Better Mortgage. “Instead of the traditional manual and paper document-based experience, customers can upload and eSign documents, get loan estimates in seconds and a preapproval letter in as little as three minutes.”
Keeping Costs Low and Customers Satisfied
However, securing a home takes more than just getting pre-approved. A motivated seller may choose a buyer who can get the money to them immediately, as was the case for Garg.
Additionally, a buyer with cash on hand may have an advantage over a buyer seeking a traditional mortgage if the mortgage company is not moving fast enough. Jonsson said Better Mortgage’s customers can close escrow 10 days faster than the industry average.
“Online lenders provide more transparency and speed to customers,” Jonsson said. “At Better, you would get a personalized rate quote — [a] loan estimate — in seconds, preapproval in as little as three minutes and no origination or lender fees.
“Lenders who aren’t online have to work with a lot of paperwork and do it by hand, and that’s why their turnaround time is usually 45 to 60 days to approve and process a loan. Better’s entire process from start to finish is online, so our turnaround time is three to six weeks for a single-family home.”
Along with paperwork and phone calls, traditional mortgage processes have fees and costs to cover the work that is going on behind the scenes. By eliminating a lot of the work that goes into a traditional mortgage, a fully digitized platform also lowers costs, ultimately saving borrowers money that can go toward purchasing a home, Jonsson said.
“By eliminating commissions, our borrowers save an average of $3,500 in fees on each loan, allowing people to select better areas with better schools or more convenient commutes,” he said.
Not every step of buying a home with a mortgage can occur in a mobile app, but even those processes can be sped up and made more convenient with digital integration and a centralized customer interface, according to Jonsson.
As the primary touchpoint borrowers have with the lender, a digital interface also has to be intuitive and provide a centralized platform for borrowers to navigate and find information regarding the status of their mortgage applications.
“Customers can use our digital platform to schedule phone calls,” Jonsson said. “We have tracking tools that notify customers about progress and any steps they need to take, similar to how FedEx updates customers on a package shipment or Grubhub on pizza delivery.”
The Digital Future of Homebuying
As the industry continues to evolve and adapt, Jonsson said that the streamlined approach Better Mortgage uses will likely become more common. He believes homebuying will become a fully digital transaction, similar to what consumers now experience when ordering groceries through Instacart or everyday items on Amazon.
“Technology is now making house hunting and buying more convenient. Post-pandemic, the leaders will be the ones who offer a streamlined, digital home-financing journey,” Jonsson said. “According to the National Association of Realtors, millennials — many with young children — are now the largest group of homebuyers, and their digital-native preferences will shape homebuying for years to come.”
As with other financial services, borrowers expect to open an app on their phones and immediately know what is happening with their mortgages. They want to find relevant answers to their questions and feel like their inquiries and requests are moving along.
Some mandatory wait times are built into the mortgage process by law and thus cannot be avoided or sped up, but digital tools may help consumers positively approach these by providing a clear roadmap. No matter how quickly funds are disbursed, consumers will not feel the benefit of a faster disbursement if they are bogged down in the process that gets them there.
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