Updated December 14, 2022
Digital mortgage applications have become industry table stakes. While some companies offer a digital solution to get prospects pre-qualified quickly, other companies have expanded beyond the initial loan application to provide an entirely digital mortgage process.
As mortgage lenders try to keep pace with this ever-evolving process and customer expectations, technology advancements have focused on the milestones towards the conclusion of their digital mortgage roadmap.
If delivering a digital mortgage experience is now the expectation of borrowers, particularly younger homebuyers, why aren’t more mortgage lenders offering a user-friendly digital solution at the top of the funnel to get their clients mortgage-ready?
According to Fannie Mae’s National Housing Survey1, 36% of homebuyers did not shop around before selecting their mortgage lender in Q1 2022, which has been consistent with survey findings since 2014. The top reason surveyed homebuyers gave for not shopping around was that they felt most comfortable with the lender they received the quote from (39%). This is great news for lenders! If prospects can be reached early in their homebuying journey and lenders stay meaningfully engaged, they will likely apply for a mortgage with that company.
Providing a digital solution that empowers borrowers to become mortgage ready at their own pace and can deliver an experience that will ultimately drive repeat business and referrals should be the new focus of every mortgage company’s digital mortgage roadmap.
FinLocker levels the playing field
FinLocker provides independent mortgage banks, community banks, and credit unions the same opportunity to get their borrowers mortgage ready as the mega banks and online lenders.
Smaller mortgage lenders and financial institutions are less likely to have the technology and marketing resources to nurture prospects through to close and engage with clients post-close to develop a relationship to retain their customers for life.
When loan officers invite their customers to download their private-labeled FinLocker, they are taking the first step to invest in a long-term client relationship. Providing customers with free financial tools to improve their credit score, help them budget, save for their down payment and closing costs, and reduce their debt-to-income ratio to qualify for a mortgage, will drive customer loyalty, resulting in higher lead-to-loan conversion. Homebuyers can monitor their progress toward mortgage eligibility with the readiness snapshot, and the lender can see when consumers meet mortgage eligibility through the admin portal.
The loan officer who provided the FinLocker invitation is displayed as the lender contact in the customer’s FinLocker, so the customer can initiate a loan application directly from their app when they are confident they will meet the eligibility guidelines for their preferred loan product.
Be the lender your borrower wants you to be
The majority of homebuyers responding to a Fannie Mae survey2 said that “gathering all the financial documentation is the most difficult part of getting a mortgage and that paperwork reduction is critical to making the process easier.” Borrowers who have grown up in a digital world now expect an Amazon-like experience, where their financial activities can be quickly and securely incorporated into subsequent transactions, including their mortgage application.
When customers use a FinLocker, they do not need to restart their application from the beginning when applying for a mortgage. While saving for their downpayment and improving their credit health, borrowers can gather necessary documents, upload them to their FinLocker, and securely share their financial data and documents with their loan officer when they are ready to apply for a mortgage.
Manual processes are cumbersome and prone to human error. FinLocker uses consumer-permission data so consumers can select which assets, liabilities, and documents saved in their FinLocker are securely shared directly with their loan officer for inclusion in their loan application. The documents are packaged as Mismo and Fannie Mae 3.2 file formats along with an Asset Report, reducing the risks associated with manual data input and lost paper and emailed documents.
Gain market share
Independent mortgage banks reported a total loan production cost of $11,106 and a net loss of $624 on each loan they originated in Q3 2022, according to the Mortgage Bankers Association3, so it’s not surprising that mortgage lenders are looking to reduce costs and increase productivity to stay afloat.
The consumer-permissioned financial data shared from FinLocker helps lenders process mortgage applications more efficiently. Delivering mortgage-ready borrowers with documents and assets packaged for underwriting helps lenders reduce cycle time and loan origination costs.
FinLocker enables all mortgage lenders and loan officers to begin a meaningful customer interaction earlier in the home buying process than other marketing tactics. Issuing a custom-branded FinLocker app keeps the financial institution top-of-mind for the duration of the homebuying journey and initiates a value-added relationship to create a customer for life.
1 Fannie Mae, National Housing Survey
2 Fannie Mae, What To Digitize First, According To Recent Homebuyers
3 Mortgage Bankers Association, Quarterly Mortgage Bankers Performance Report