The onus of technology is to make lending as easy as possible for the lenders and the borrowers. Has it done enough? It used to be that applying for a mortgage involves actually going to the banks and applying in person. Whether it’s for a car or a house loan, borrowers tend to stress out about the idea of applying for a mortgage. It can be overwhelming, too, when you think about the documents you need to prepare to get a loan that you will have to pay for the next 20 years or so.
Thankfully, technology made it simpler for lenders and borrowers alike. And no, it’s not just because of the coronavirus pandemic. Even before the pandemic in March, financial institutions have already rolled out lending systems that make it easier for a competent mortgage broker to compute how much a borrower can get, as well as the interest that will be accrued.
Applying for a Mortgage Online
Visit any bank’s website right now and you will see a mortgage calculator. Here, you only need to input details such as the total amount to be loaned, the terms of the loan, and your yearly income. The calculator will estimate how much you can get approval for and the interest rate of the loan vis-à-vis the number of years you’ll have to pay the loan. This gives borrowers a good idea of their chances for approval.
If they find it cumbersome to deal with this system, they can also request an online meeting with a loan officer. The agent can discuss the requirements of the loan, and the other pertinent details that will help the borrowers decide. If you decide to apply for the loan, you can send copies of the requirements via snail mail or through digital channels.
Big Data for Financial Institutions
While technology is making it easier for borrowers to get the information they need from the banks, the same technology is helping financial institutions understand their borrowers. When borrowers enter their information on these loan calculators, they give their information such as their yearly income. This allows the bank to access information that will help them come up with better offers.
From the information you enter, the bank can determine the needs and demands of the market. How much does a borrower with the same annual salary as yours want to borrow? What kind of loans do consumers want now? In the midst of a pandemic, are they applying for a home loan or a car loan?
These systems use machine learning to understand the market’s shifting demands and dynamics. The insights gained from these systems will help lenders refine their products to meet the ever-changing demands of the consumers. With better offers, borrowers have more options to choose from when they need to apply for a mortgage.
Mortgage rates and eligibility are always moving as they are impacted by economic highs and dips. There will always be a level of uncertainty when it comes to mortgages. But with modern technology, these concerns and uncertainties may be things of the past now.