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Celebrating National New Home Owners Day, May 1, 2019

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May 1st is National New Home Owners Day.

Today, May 1st is National New Home Owners Day. Many home buyers moving into the market, such as millennials, are buying a home for the first time. These new home buyers may have seen ads for a “mortgage in minutes” where you can apply for a loan on your smartphone.

In reality, this is not how things work. It’s important for lenders to educate new home buyers on what is real and what is not when it comes to digital mortgages. Let’s take a closer look at how things really work…

First, let’s start with the front-end systems that you use on your phone, tablet or laptop.

These allow you to submit some information online, such as your income, assets and credit score. What you may get back in minutes, or a short period of time, is an estimated pre-approval for a loan. This is only an initial estimate. Next, you will need to support the numbers that you entered on your phone or PC by submitting actual documentation for income, assets, liabilities, credit rating, etc.

Later, these documents are sent to a large facility filled with people who review the documents in detail, asking questions and requesting more information. This creates a bottleneck that turns an “instant mortgage” into a much longer process, which is similar to a traditional mortgage. On average, it takes about three weeks to close a mortgage, including underwriting and all the necessary approvals. And, the later stages of this process are where approvals may get denied, and loans may be turned down.

To get the mortgage application and underwriting process from three weeks down to 1-2 days, lenders need the help of technology, namely artificial intelligence (AI), machine learning and automation. AI can make the gathering, reviewing and verification of mortgage documents on the back end much faster and more accurate. Documents can be automatically scanned, processed and verified, and consumers can see what the current status of their mortgage application is, and what, if any, additional information is required. This type of real-time information can help to prevent the surprise of a last-minute denial of your loan application.

This is where AI Foundry comes in – using AI and ML we integrate with the existing LOS platform to make mortgage processing faster, more accurate and deliver a better customer experience for lenders and borrowers.  This technology can also help lenders respond to fluctuating seasonality in the mortgage industry. You can easily scale up (or down) your productivity with AI and ML as loan volumes rise and fall. For more detail, this quick video explains how AI Foundry can accelerate and improve the mortgage process.

While the “approved in minutes” concept gets consumer attention, those of us in the mortgage industry know that behind the marketing campaign is the same labor-intensive mortgage approval process (on the back-end). By using cutting-edge technology in the back-end of mortgage processing, the home buying and loan application experience can be better for many home buyers in the market, while allowing lenders to be more agile and responsive to seasonal changes in the mortgage market. Spring buying is in full swing – be ready to make the most of it!