Traditionally, a loan application was a slow and lengthy process. Prospective borrowers had to visit banks or mortgage lenders in person, dealing with numerous paper-based forms. However, with the digital shift across the financial industry, mortgage apps have become a fast and efficient solution. Streamlined applications, useful tools, and an enhanced UX have made them a new staple in the market.
The growth in popularity for mortgage software is rooted in the expansion of FinTech products, mobile penetration, and data analytics. The software has ample potential for simplifying complex procedures and accelerating loan clearance. Investing in such digital solutions is a clever choice for financial brands and enterprises planning to strengthen their market position.
This article will review the key steps and features for building an effective and competitive mortgage application.
The outlook of the mortgage app market
As digital transformation is reshaping the mortgage sector, online solutions are steadily gaining popularity. Software for mortgage is taking over the industry with its fast and client-centric service, better visibility, and expanded options. The optimized application and approval elevate the experience for borrowers and lenders alike.
The digital lending market is predicted to boost 13.8% CAGR by 2026, reaching an estimated $20.5B. This is almost twice as large as the 2021’s $10.7B, which illustrates the great potential of mortgage software solutions. Mortgage rates in the U.S. are anticipated to decline throughout 2024, and this will provide more opportunities for borrowers.
Let’s review the core trends that are shaping up the industry and its future:
Active digitalization
Millennial & Gen Z customers are eagerly embracing digital banking, and mortgages are no exception to this rule. In fact, the Millennial age group has made the biggest home buyer share from 2014 to 2022. Mortgage lending software wins over the conservative application procedure by being simple, more transparent and streamlined.
Taking mortgages online is a natural progression for any banking client that prefers managing their finances from a smartphone. Consequently, financial services providers are working to enhance their digital offerings.
AI/blockchain
Artificial intelligence and machine learning tools can expedite the management of loan applications up to mere seconds. Smart document management, fraud detection, and predictive analytics boost the general experience for both parties. The data-centric approach to lending promotes fine-tuned strategies and thoughtful decisions.
As for blockchain-driven lending platforms, they are lauded for the upscale UX and lack of intermediaries. Such mortgage platforms offer a suitable virtual space, where lenders can contact borrowers directly and vice versa. Transparent and efficient, they enable global accessibility and economic inclusion.
Open-banking APIs
Previously, lenders were affiliated with a few vendors of loan organization systems (LOS). While offering a comprehensive set of services, such systems could be difficult to adapt to specific business needs. The main reasons for this issue included non-flexible workflow, sluggish upgrade cycles, and low customization potential.
The adoption of open application programming interfaces (APIs) has allowed vendors to design highly customizable future-proof platforms. By implementing upscale rules engines, low-code workflow, and analytics tools, they are now able to drive higher efficiency. Incidentally, the market capitalization growth for companies using APIs was 12.7% higher over a 4-year period.
The benefits of building custom mortgage software
Custom mortgage apps give lending institutions a strategic advantage by being tailored, effective, and user-centric. Developing mortgage software enables addressing the individual requirements of loan applicants. Innovation opportunities and boosted satisfaction are the key motivators behind adopting mortgage automation.
Let’s assess the core advantages of customized mortgage software:
Data protection and compliance
Custom mortgage applications can incorporate upscale security features for safeguarding sensitive borrower data. Such technological solutions as encryption, access controls, and data backups help maintain trust with borrowers, expanding the outreach. An important component of data safety in this case is legal adherence, realized with integrated compliance modules.
Custom mortgage loan software is ideal for meeting the sector’s compliance requirements, such as data security, anti-prejudice, and client protection. Both lenders and brokers would welcome protection from legal repercussions and conflicts. That is where customization can make a substantial difference, transforming the mortgage industry in a positive and more inclusive way.
Enhanced sales and mortgage rates
Automated software can facilitate many procedures, including the initiation of reporting. It can generate more reliable and comprehensive reports for different stakeholders (home buyers, investors, etc.). In this way, a lending enterprise can offer their services to more clients, boosting the sales and mortgage numbers.
Another strong point of mortgage broker software is its accuracy. The tasks and estimations completed by such software minimize the likelihood of human error in processing applications.
Moreover, built-in validation checks secure that all input data is complete and relevant. This involves checking the borrower and real estate specifics, income figures, and credit grades.
Optimized data administration
Both lenders and brokers can profit from more transparent data in their judgments. This can offer valuable assistance in pinpointing the trends, monitoring performance, and fine-tuning loan methods. Mortgage management software offers data solutions that are customized to the specific requests of parties involved.
A centralized repository for borrower-related data (loan applications, financial documents, etc.) can facilitate the accessibility of relevant data. Electronically stored documents are also easier to manage, reducing manual paperwork.
Moreover, bespoke software can automatize mortgage application steps, from submission to verification and underwriting.
Procedure optimization
Tailored software for mortgage brokers plays a pivotal role in enhancing productivity and minimizing errors amid transactions. Instead of dealing with the documents and other data by hand, lenders can entrust it to digital assistants. As a result, the chance of errors and lags goes down significantly, making for quicker and more accurate approval flow.
On top of this, procedure optimization allows loan providers to quickly adapt to industry changes and customer expectations. The flexibility of mortgage automation software makes it easier to modify and update for revised regulatory requirements or industry trends. Subsequently, lenders can beat the competition and capitalize on emerging opportunities.