Mortgage borrowers, especially in the Beehive State, typically have to contend with several pain points. There is always something that gets in the way of a smooth-sailing loan application and affordable home ownership. Such challenges are no secret, but they never been seriously addressed until tech startups began to interfere.
Thanks to the financial technology (fintech) boom, buying a property is more convenient than ever. Before you explore house listings in Daybreak, Utah, or any other attractive community, and make an offer, here are some of the innovations that disrupted the mortgage sector worth knowing:
Open Banking
This concept gives all players in the lending business easy access to consumer credit data. It is a game changer because it takes away the main competitive advantage of incumbent banks to level the playing field for their smaller rivals.
In the end, open banking aims to benefit consumers like you. Since tons of consumer credit data have been available for the consumption of fintechs, mortgage marketplaces now exist. Like property listings, these platforms allow you to find a large number of home loans in one place, so you can shop around, compare products, and reach out to lenders with more convenience.
Artificial Intelligence
In theory, AI simplifies all tasks that generally require humans. Computers are automating the mortgage application process, accelerating the speed of loan approvals as fast as seven minutes.
loanDepot’s “mello smartloan” technology is an excellent example of AI in action. Using it does not mean you are no longer required to send documents, but you will not have to deal with a tremendous amount of paperwork anymore. Since it digitizes practically everything, it allows underwriters to determine which borrowers qualify for which loans in record time.
Peer-to-peer Lending
This business model might be novel, but it has made a dent in the ubiquity of traditional mortgage lenders. P2P lending allows everyday investors to finance your purchase and turn a profit. Since P2P lending platforms like SoFi operate online, they tend to offer more competitive interest rates and fees because of their relatively small overhead.
Crowdfunding
Asking others to help fund a down payment for a home sale is not uncommon, but this business model is turning a traditional practice into an Internet drive. Companies like HomeFundMe helps homebuyers raise enough funds in a short period by starting a crowdfunding campaign.
Third-party Payment Processing
Third-party online payment service like Plastiq allows mortgage borrowers to make repayments with a credit card for a fee. This option is helpful since many lenders do not accept plastic to discourage the habit of replacing one debt with another.
While there are valid reasons not to pay a mortgage with your Mastercard or Discover, it can be rewarding as long as you can settle your entire credit card bill before the due date. It helps you earn points, chase a sign-up bonus, buy time to pay your mortgage to avoid a late payment, and even combat foreclosure.
Indeed, fintech is making mortgages more accessible and affordable. Although it does not eliminate the inherent risks of buying a house, it has been successfully rendering the loan application and repayment process a lot less painful.
