Last Updated on March 29, 2024 by Luke Feldbrugge
Mortgage loan officers can benefit from implementing online mortgage application technologies. The advantages of offering online mortgage applications range from increased efficiencies to enhanced customer service and increased marketplace competitiveness. It is important to understand, however, that balancing the advantages of technology with the know-how and personal touch of an actual loan officer remains important to providing a good client experience.
While Freddie Mac continues to report decreases in the 30-year fixed rate mortgages overall, rates are expected to remain higher than hoped. In Fannie Mae’s March Economic Developments, experts are expecting a 6.6% average in 2024 and 6.2% average in 2025.
After the recent Federal Open Market Committee (FOMC) meeting, the Federal Reserve announced it would continue to keep interest rates at 5.25%-5.5%, where they have been since last July 2023. The Fed doesn’t control mortgage rates, but its actions certainly influence them. Because the market expected rates to remain steady, loan rates had already taken the Fed’s stance into account.
“The mortgage market already incorporated that,” Lawrence Yun, chief economist at the National Association of Realtors told USA TODAY. “Consumers who may be looking for (rates of) 3%, 4%, I don’t think it’s going to happen, or even 5%. Consumers need to recognize the new normal.”
Even with these expectations, more people are filling out loan applications than earlier in the year. Loan officers who are responsive and informative will have an advantage if they are nimble and prepared to assist potential borrowers. Online mortgage applications are one way loan officers can help respond quickly to customer demands.
How Can Loan Officers Implement Online Mortgage Applications?
Loan officers can leverage a competitive advantage by using online mortgage applications and should carefully consider the value-added to their business by digital mortgages.
Reduced Redundancies and Greater Efficiencies
Online mortgage applications offers a more streamlined process that ultimately helps move clients from pre-approval to closing more quickly. At the same time, it gives loan officers the ability to potentially handle more loans and focus on the “personal touch”. It allows time for building new relationships and nurturing clients, and making sure they understand the process to receive the best terms on their loans.
Superior Customer Service
For many borrowers, especially younger ones, excellent service comes with 24/7 availability, speedy results and simplification of the process. Online systems provide loan officers with the potential ability to offer their clients progress reports, transparency, and easier methods of communicating and information sharing.
Lead Generation
Online mortgage application systems are a great way for loan officers to potentially reach a higher volume of prospective homebuyers and turn them into customers. According to ICE’s 2023 Borrower Insights Survey, an increasing number of borrowers, 70% in 2023, were persuaded to work with a specific lender simply because the lender had online application capabilities. Borrowers see this as a credibility factor that shows a loan officer is up on the latest marketplace trends and efficiencies to provide a better client experience.
The Volume of Mortgage Applications Is on the Rise
The volume of mortgage applications is on the rise, which seems counterintuitive to the current economic conditions. A recent weekly survey by the Mortgage Bankers Association’s (MBA) shows the application number increased by just over 7.1% in a single week. The MBA also reported that the February 2024 volume of applications for new home purchases offers encouraging news.
“New home purchase activity in February was slightly hampered by the rise in mortgage rates over the month. However, homebuyers kept up their demand despite how competitive the purchase market still is, driving the level of applications to 16% ahead of last year’s pace,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.
Digital mortgages will give loan officers who stand ready and equipped, an edge in winning borrower business both in terms of their ability to handle a greater volume of business and offer borrowers improved customer service.
Why Are Loan Officers Still Necessary with the Increased Popularity of Online Mortgage Applications?
While the popularity for online mortgage application technology has increased, the need for loan officers to manage client needs remains greater than ever. Digital mortgages certainly can make loan officers better at their jobs, but there are important job duties that a computer just can’t do. Furthermore, borrowers continue to demand the winning combination – a lender offering “high tech and high touch.”
Most borrowers don’t want a purely online mortgage lending experience. Borrowers want both the advantages offered by an online mortgage application processes and those of a personal loan officer. Digital mortgages don’t replace loan officers, they give loan officers time to focus on doing what they do best that can’t be done by technology. The human element can’t be replaced.
Getting a Complete and Accurate Borrower Profile
While online applications are extremely helpful, they do not provide a complete picture of the borrower. This job belongs to the loan officer. It includes understanding the borrower to help manage the emotional side of the home buying process, considering the complete financial situation, personal risk tolerance level, life goals and other factors that feed into getting a borrower into their dream home.
One Size Does Not Fit All
There are straightforward loan applications and situations. However, not all borrowers fit within the lines of an online process or have the same needs and circumstances. A loan officer can work through complex situations and unusual circumstances outside of the norm, or offer cost savings solutions meeting a borrower’s specific needs.
The Homes for Heroes Hero Rewards is an example of an opportunity for a loan officer to use that “human touch” to benefit a borrower in cost saving terms if the borrower in question is a firefighter, EMS, law enforcement, active military or veteran, healthcare worker or teacher.
Strategic Advice and Representation
A computer simply can’t replace the know-how a loan officer gains through years of experience being involved in lending, negotiations and navigating countless clients through to closing. Technology can’t replace a lender’s ability to understand market trend realities, and translate it into real-time strategic counsel. This takes a human’s understanding and flexibility a computer doesn’t have.
The Future of Technology in Mortgage Lending
Online mortgage application capabilities are just one example of how technology is changing the mortgage industry. Mortgage lenders who choose to use online mortgage application technology to enhance their businesses and complement the tech with their own lending skills will prevail.
This holds true for technological advancements in other aspects of the business. Technology will continue to revolutionize the industry, including application programming interfaces (APIs) to blockchain technology, machine learning and artificial intelligence.
Join Homes for Heroes – Be the Lender Heroes Want
Homes for Heroes can help you specialize in your market and grow your mortgage lending business by focusing your services on helping your local heroes buy or refinance a home. You can offer them something special, something beyond the transaction, by saving them money as a way to thank them for their service.
Simply register and schedule a time to learn more about the benefits of being a Homes for Heroes local market specialist, and become the lender your community heroes want to work with for their mortgage needs.
