(Newswire.net — May 3, 2019) — Anyone looking to buy or refinance their home has likely come across the term fintech.
This is basically an umbrella term for various financial technologies that are shaping the modern world of finance, with common examples including online banking, mobile payments, blockchains, and even online lending.
Yes, there are now financial lenders that operate entirely online thanks to fintech!
This technology is already having far-reaching effects in the world of finance, especially in the housing market, where fintech is providing a range of benefits for those that want to buy or refinance a property.
Let’s take a closer look at these benefits!
Faster Loan Processing and Approval
A notable benefit of choosing a fintech lender is how much quicker the mortgage application process is. Technologies such as AI-backed chatbots and cloud databases allow lenders to pull vital personal information that’s needed to process loan applications.
Older methods required a lot of manual searching to get required data for each applicant, making the process take several weeks in most cases. Fintech lenders have drastically reduced the time it takes to process and approve a mortgage, ranging anywhere from 7-10 days faster for a mortgage and 10-15 days faster for refinancing.
This is beneficial for borrowers as the process not only becomes much quicker but any errors or problems can be quickly identified and addressed.
Cheaper Mortgages
Perhaps one of the biggest benefits of using a fintech lender is lower rates on the mortgage. One reason that this happens is because the mortgage application process is more streamlined, taking less time and resources to complete, helping to reduce the fees associated with mortgage applications.
Beyond this, fintech lenders tend to offer lower interest rates compared to traditional lenders. For example, research by the Federal Reserve Bank found that fintech lenders offer interest rates that are around 7.5 basis points below traditional lender rates.
Fewer Mistakes
It’s easy to think that online mortgage applications are more susceptible to errors because of the faster nature of processing, but the opposite is actually true.
Reports suggest that applying online for a mortgage with a fintech lender reduces the chances of errors on the application. This is due to much of the process being automated, reducing human errors that are common in applications.
Less Paperwork
Gathering paperwork is one of the most frustrating aspects of applying for a mortgage. Copies of various financial accounts need to be provided to the lender in person, both of which take a lot of time and effort.
With fintech, lenders use their technologies to quickly gather various financial records of the borrower to determine their suitability for the loan. Everything from income to tax can be gathered using fintech, while any documents that aren’t available can simply be uploaded digitally.