With the increased use of digital tools, the mortgage process today looks quite different from what it was for previous generations. These new technologies can make the real estate loan process more efficient for both homebuyers and those refinancing their mortgage. However, it is important to understand how your information is being used.
To help ensure that you are a savvy loan applicant, Freddie Mac is providing answers to some common questions about digital mortgage tools:
Why do lenders use digital mortgage tools? Lenders have traditionally relied on printed documentation that requires them to manually review your application before deciding if you qualify for a loan, including the amount and terms. This can be a time-consuming process for both the homebuyer and the lender. Digital mortgage underwriting tools allow lenders to speed up the process by using electronic documents and automation to assess your loan application more efficiently. Freddie Mac research has found that these tools can reduce the loan origination timeline and can also save money on closing costs.
Additionally, the digital tools used by mortgage lenders can help you qualify for a loan if you have a limited credit profile by analyzing factors such as your on-time rent payment history or the amount of money coming in and out of your bank account each month. This helps demonstrate your ability to pay the mortgage each month.
What information will my lender ask for? Not only will the way you provide documentation change, but in some cases, the information your lender evaluates may also change. For example, you may be asked to provide access to digital accounts, such as your bank account, instead of providing printed bank statements. By using digital tools, lenders can gain a more detailed view of your finances, which helps them approve loans if you are a harder-to-assess borrower. Specific requirements may vary by lender — some may prefer a fully digital process, while others may use a combination of printed and electronic documents. Talk to your lender to better understand their loan application process.
What if I don’t feel comfortable providing my information? While your lender may have a more detailed view of your finances through a fully digital process, keep in mind that digital documents often offer a higher level of security than printed documents. If you still prefer not to share digital access to your personal information, your lender should understand your concerns and be willing to work with you on an alternative solution. Otherwise, you may find a different lender who is willing to accommodate a loan application process that is not digital. In any scenario, you should always take steps to ensure that your personal information is protected and remain vigilant against potential fraud. You can help mitigate the risk of fraud and identity theft by researching lenders and working only with reputable companies that take steps to protect their customers’ information.
Learn more about the mortgage application process with Freddie Mac’s step-by-step guides for home buying and refinancing, available at myhome.freddiemac.com.
As the real estate financing industry continues to modernize, you can expect a faster and easier real estate loan process. Staying informed about these new tools can ensure there are no surprises when it comes time to secure a loan.
Source: StatePoint