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How Technology Plays a Part in Getting a Mortgage Today

By U.S. News & World Report

Technological advancements lend themselves to countless consumer-facing industries, even transforming ones such as hospitality, travel and banking.

But if you can manage numerous accounts online without ever having to sit down for a face-to-face conversation with another human, why is the process of getting a mortgage so different?

The real estate financing process is often expected to be a series of in-person meetings at banks or other offices, complete with scanning documents of financial background information and a slow approval process.

One possible reason the mortgage industry has been slow to adopt new technology is because the housing crisis caused lenders to clam up, explains Tom Rhodes, CEO of Sente Mortgage, a Texas-based lender that opened just in time for the housing bubble burst in 2007.

But those days are rapidly changing. Lenders are beginning to embrace more new technology, and new lenders are even entering the game based around an automated platform.

“In the last 18 months, we’ve really started seeing where things have gotten easier,” Rhodes says. “Companies are using big data, companies are using more automated systems and processes and using technology to produce a smoother experience.”

[Read: How Moving to a New Home Affects Your Taxes.]

Here are four things you should know about how technology is now playing a part in your mortgage process.

Options go beyond the online form. An important part of the mortgage industry’s evolution is automation — not just allowing you to fill out forms online, but also granting access to financial and employment backgrounds without requiring repetitive work for you.

Rather than having to provide all the same detailed pieces of information you would when filling out a paper form, your communication with the lender is more about borrowing programs that would fit best and not what details you have or haven’t provided yet.

By streamlining that process, mortgage lending moves away from a transactional business and “turns into a relationship business,” says Dom Marchetti, chief technology officer for loanDepot, a technology-focused lender.

Other more traditional lenders — banks in particular — are automating their processes as well. One way is by utilizing Roostify, a mortgage technology company that provides an automated platform for lenders.

“It creates an online experience for the consumer, from potentially the moment they express interest in learning more about the lender’s offerings to the moment that they sign their final closing documents,” says Rajesh Bhat, CEO and co-founder of Roostify.

From there, the online platforms are also designed to provide detailed updates about your application and the approval process and often allow you to e-sign documents so you avoid adding new meetings to your existing list of sit-downs throughout the homebuying process.

[See: The 25 Best Affordable Places to Live in the U.S. in 2017.]

Face-to-face options remain. Of course, there’s no way every consumer looking to purchase a home is going to feel comfortable getting a mortgage online, whether it’s a tech-literacy issue or simply because you may enjoy an in-person conversation.

“Every bank needs to provide that option to support consumers who don’t wish to engage online at all — you have to be able to support that,” Bhat says.

Even the lenders focused on automated processes, such as Rocket Mortgage by Quicken Loans or loanDepot, offer human interaction to help you each step of the way.

“We get to interact with you on your terms,” Marchetti says of loanDepot’s platform.

Security and protection is a major focus. We hear almost every day about a new data hack in a retailer, firm or even hospital that has compromised consumers’ private information. Knowing how much valuable information is compiled during the mortgage approval process, companies are taking measure to reduce the chances of that happening.

Especially for companies specializing in the tech aspect, securing your information is a major part of the job — and it’s an ongoing process. “When information comes into our solution, we are effectively encrypting everything at rest and in transit,” Bhat says.

Marchetti explains that loanDepot has placed particular focus on keeping hackers from reaching client information, having blocked repeated attempts to access company data. Key to protection is segmentation to avoid a mass download of information, he says, so “if you get access to a piece, you don’t get a whole.”

But the greater level of protection isn’t just for the consumer’s benefit — the automated process itself allows for heightened transparency between the borrower and lender, cutting down on potential for fraudulent information being given to the lender, Marchetti says.

[Read: With Rising Interest Rates, Is Now Still a Good Time to Buy a Home?]

The industry is poised for tech growth. Even with the progress of the last year and a half, the mortgage industry is likely in just the beginning stages of its evolution to catch up with the travel, banking and other tech-transformed industries, Rhodes says.

He points out, in particular, that while employment verification for homebuyers has been automated with Sente Mortgage and other companies, it doesn’t work with all types of employment yet. “The box is still pretty small,” Rhodes says.

But with the ball rolling, it’s only a matter of time before more people qualify for a fully automated process, and the mortgage industry loses its antiquated reputation. But the general practice of shopping around for a mortgage should remain the same — work with the lender to find the right mortgage program for you.

“We’re still in the early days of this. … I think it’s going to be a radical improvement in the process,” Rhodes says.

Homebuyers and other borrowers can reasonably expect for automation in verification of employment and financial history to expand to cover more people as technologies develop and a larger portion of the industry gets on board.

Further behind-the-scenes automation means the loan approval process can be streamlined and made more accurate. Already, Fannie Mae’s Automated Property Service uses its extensive information to provide a predicted property value and a confidence score to be used as a factor when considering eligibility for the Home Affordable Modification Program. As more major industry players support a more transparent process, small and large lenders nationwide will be able to automate more as well.

More from U.S. News

The Best Places to Live in the U.S. in 2017

10 Terms First-Time Homebuyers Must Know

10 Must-Ask Questions When Choosing a Real Estate Agent

How Technology Plays a Part in Getting a Mortgage Today originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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