With the rising demand for housing and real estate investments and global technological advancements designed to simplify the everyday routine, the mortgage industry has undergone transformational changes in recent years. Gone are the days when it took weeks or even months to complete a mortgage application. The advent of technology has made it possible to complete the mortgage process within days and sometimes within hours. One of the areas that technology has impacted is mortgage underwriting. Industry expert Brandon Gilkey will delve into how technology is revolutionizing the mortgage industry by revolutionizing the mortgage underwriting process, thus saving time and money and minimizing the risk of errors.
Automating Data Collection and Verification
Underwriting is the most critical aspect of the mortgage application process, as it determines whether or not a borrower qualifies for a loan. Technology has made this process more efficient and accurate. In the past, borrowers would supply their financial details, and underwriters would verify them manually.
Nowadays, mortgage lenders use automated tools that allow borrowers to submit their financial details and documents digitally. These tools enable lenders to collect and accurately verify income, asset, and debt information. This technology has increased the efficiency of the underwriting process, as it saves time and eliminates redundancies.
Improved Risk Assessment
Underwriters must determine if a borrower has the ability and willingness to repay the loan. Technology has brought about innovation to the risk assessment process, enabling underwriters to make more informed decisions. Automated tools used in mortgage underwriting, such as Fannie Mae’s Desktop Underwriter, collect data from multiple sources on borrowers’ credit history, employment verification, and credit scores.
It analyses the data and provides a credit risk assessment report to the underwriter, which they can use to make a more informed decision on whether or not to approve a borrower’s loan application. This technology has significantly reduced the chances of mortgage fraud and has improved the quality of loans generated.
Real-time Updates and Communication
The mortgage underwriting process involves many parties, including borrowers, lenders, sellers, real estate agents, and attorneys. Keeping track of the mortgage application’s progress can be overwhelming, leading to delays and errors. Technology has allowed information sharing and communication more efficiently throughout the process.
Underwriters can access real-time updates on documents and information required from borrowers, making it easier to keep track of the process. Additionally, technology has enabled underwriters to communicate timely updates and decisions regarding mortgage applications, which is vital for maintaining a positive relationship with clients.
Integrating Artificial Intelligence (AI) and Machine Learning
Artificial Intelligence and machine learning technology have enabled the automation of manual underwriting tasks, thus improving accuracy and speed. AI algorithms can more precisely evaluate home valuations, credit reports, and financing decisions than humans.
Besides, machine learning techniques are used to analyze borrower data, providing lenders with financial and behavioral insights that were not possible before. This technology helps generate loans more efficiently while accurately pricing the risk of the loans.
Reducing Costs
The traditional mortgage processing method is time-consuming and expensive since lenders must employ a team of underwriters to manage the process. However, technology has streamlined the mortgage process, thus reducing costs significantly. Automated tools used in mortgage underwriting save time and reduce the required staff. The technology also minimizes the risk of human error and reduces the time it takes to acquire a loan by almost half.
In addition to increasing speed and accuracy, technology has revolutionized the mortgage industry by improving the customer experience. Automated tools enable lenders to inform customers of their loan status in real-time. Furthermore, borrowers can now access online portals to track their loan status and submit documents digitally. This has enabled borrowers to be more involved and make better loan decisions.
Final Thoughts
Technology has changed the mortgage industry drastically, and underwriting is one area where technology has significantly impacted. With technology enhancing the efficiency and accuracy of the mortgage underwriting process, lenders can approve loans faster and more accurately. Automation helps to reduce the time needed to process a mortgage application and reduces the cost of processing loans. This technology will undoubtedly transform the mortgage industry’s future by saving time, money, and enhancing accuracy. The industry is going through a period of change, and everyone in the industry needs to invest in technological innovation to reap the benefits that come with it. Brandon Gilkey is the CEO of Investor Deals Today, one of the industry leaders of Single Family Residential Portfolio transactions in the United States. In addition, he is the Managing Partner of four Real Estate Holding companies with properties in 12 different states.
