Recent research from the Consumer Financial Protection Bureau (CFPB) shows that many borrowers regard closing on a home as a stressful and intimidating experience.
Some of the biggest pain points were:
- Too much paperwork to review at the time of closing;
- Uncertainty around where to direct questions about the process; and
- An overall feeling that the process is painful and overwhelming.
The good news is that new technology has the potential to greatly improve the closing experience for borrowers. eClosing technology has made huge strides within the past year, allowing at least part, if not all, of the closing process to occur digitally. This makes the closing process more efficient and helps borrowers feel more empowered throughout the process.
As of September of this year, it still takes lenders an average of 42 days to close a mortgage loan. That’s about a month and half from when the borrower initially fills out the application to when they’ll receive the keys to their new home. In a world where lenders can close an auto loan on the same day as the application and consumers can instantly transfer money to their friends, why does it still take so long to close a mortgage?
Many in the industry are still relying on traditional, paper-based closings. A wider adoption of eClosing technology could greatly benefit borrowers by reducing the average time it takes to buy a home. Docutech’s Solex eClosing technology provides powerful automation capabilities that connect all parties involved in the process—lender, borrower, seller, settlement agent, county recorder, etc.—to streamline and speed up the process.
Furthermore, the reduction of manual intervention reduces errors that would have previously delayed the process if paper-based. One example is eliminating the manual generation of closing documents: with eClosing technology, lenders can electronically generate dynamic, data-driven documents unique to each loan transaction to eliminate initial errors that take time to adjust further down the pipeline.
One of borrowers’ biggest concerns with the closing experience is feeling as if they don’t have a good grasp on the process itself. These feelings stem largely from the fact that in a paper-based process, the pace of the loan process is completely driven by the lender. The borrower must wait on the lender to send documents, and once physically signed, they must again wait for the next step to be pushed to them manually.
With new technology, lenders can electronically deliver documents to borrowers well in advance of the closing ceremony so that borrowers have ample time to understand their loan, ask questions, address any discrepancies and even optionally sign any documents they can before closing. They’ll likely also have access to other resources that will further clarify the process, such as hot-linked definitions for complicated terms and live chat functions for support.
Borrowers will also enjoy more transparency throughout the process, since this technology eases collaboration by connecting all parties involved in the closing in a shared platform. Borrowers should have access to status updates that let them know exactly where their loan stands at any given time.
While eClose technology still awaits more mainstream adoption from the mortgage industry, it’s already showing huge potential in enhancing the borrower experience. In fact, the same CFPB study found that borrowers who went through an eClosing over a traditional closing reported that they experienced greater efficiency and felt they had more control over the process. Closing on a home is one, if not the, biggest purchase a borrower will make. Deploying eClose technology eliminates stress and uncertainty so borrowers can fully focus on enjoying this exciting milestone.