Let’s take a walk down memory lane, shall we?
Not too long ago, the process of obtaining a mortgage was an eventful affair for homebuyers.
In the good old days, you had to visit or call your employer and financial institutions to obtain physical documentation of your work and financial history.
Today, most of the information you need including pay-stubs and financial statements are easily accessed online. You can print them off or send them to your loan officer within minutes.
The actual processing of your mortgage from prequalification to signing closing documents has also become less of a hassle thanks to technology.
A prequalification is an estimate of how much home you can afford. This preliminary step of home buying is one some lenders have the resources to let you do online — we’re one of these lenders.
You can get prequalified for a mortgage from the comfort of your own home. In fact, you can start and complete the process within 15 to 20 minutes depending on the complexity of the income, assets, and debts you need to enter into the online form.
The job of an underwriter is to review your finances and credit to determine your risk. Based on this analysis, the underwriter will conditionally approve, suspend, or deny your mortgage application. The process is called manual underwriting when a human underwriter is the main reviewer of your file.
An automated underwriting system uses an algorithm to crunch the data from your application to make a decision. Both Fannie Mae and Freddie Mac have developed automated underwriting products.
The benefit of an automated underwriting system is that a lender may be able to get a response to your application instantaneously.
While automated systems are improving processes, they haven’t taken the place of manual underwriting entirely. There’s still a human who verifies your information initially. You may also require a manual review if there are red flags found in your file.
With that said, the automation element can still speed things up if you have a strong file without items that require additional investigation.
An appraisal is when an unbiased third-party professional determines the value of a home for a first mortgage, second mortgage, line of credit, or home equity loan.
Like automated underwriting, automated appraisals are another area that can make homebuying simpler.
It works similarly to automated underwriting. Variables about the home such as property records and features are entered into an algorithm to determine the value, or determine if an appraisal is needed or not needed. In some cases, automated appraisal systems can do the job faster and possibly more objectively than an actual appraiser.
Besides innovation in the mortgage process, the way we shop for and sell homes has changed remarkably over the past few decades. With the click of a mouse (or touch of a screen), you’re able to list your home or shop for homes across the world.
We predict advancements will continue to simplify home buying and selling. Atlantic Coast Mortgage is committed to staying ahead of the curve by including technology in our mortgage process for the benefit of our clients.
