Buying a home in today’s market is challenging from start to finish for many consumers. Reduced supply, increased demand and competitive bidding wars riddle the path to homeownership. The struggle doesn’t end there, according to recent homebuyers who responded to Finicity’s 2021 Mortgage Survey, which is available now.
Many are still struggling with the decades-old headache of collecting mountains of paper documentation for underwriting. This antiquated holdover from a bygone era continues to add unnecessary stress and anxiety to processing, underwriting and closing a mortgage.
To get a better understanding of what borrowers are going through in this white-hot market, Finicity surveyed over 1,000 consumers who have purchased or refinanced a home in the last year and compiled the insights into High Demand, Higher Hurdles in the Mortgage Market, which details these pain points and provides a window into how the mortgage lending industry can evolve to meet the shifting needs of today’s homebuyers and refinancers.
Big Opportunities for Change in the Mortgage Process
Many consumers approach their home purchase with excitement and, understandably, a bit of trepidation. But while today’s homebuyer grits their way through a challenging shopping and bidding environment, any excitement can quickly turn to angst when they are met with a cumbersome and laborious mortgage loan process.
Refining the mortgage process means identifying and removing pain points for homebuyers. Our survey uncovered that 89% of borrowers believe the loan application experience was as stressful if not more than the home buying experience itself. Eliminating friction during the mortgage process is a critical step in building loyalty and meeting the expectations of today’s homebuyer.
Many homebuyers were surprised to learn that physical documents still make up a large portion of mortgage documentation. Seventy-two percent of respondents were surprised or very surprised at the volume of paper that’s still used during the mortgage process.
Going Digital Means Reduced Stress
The majority of today’s homebuyers are accustomed to navigating life digitally, and the mortgage experience should align with this.
Only 12% of respondents indicated that they were uncomfortable permissioning their personal financial data to a lender. Meeting consumers where they feel most comfortable helps save them time and reduces unnecessary stress.
Borrowers who used digital mortgage verifications were less likely to say the loan process was the most stressful part of buying or refinancing a home, and 83% of respondents using digital verifications said their loan processing time was shorter than expected or met their expectations.
For many industries, the COVID-19 pandemic has been the catalyst to transition to digital solutions. While the mortgage industry has started down this path as well, there is still work to be done. Reducing friction through digitization of manual loan documentation and minimizing the document-chasing between lender and borrower is a key component of this transformation.
Consumer-permissioned data delivered through our open banking platform allows for digital verifications throughout the mortgage process, significantly reducing the time it takes to close. In today’s mortgage landscape, this can mean the difference between consumers stepping into their dream home after a quick, seamless loan process, or losing out to a buyer who is using digital lending for a quick close.
The complete findings are now available in Finicity’s most recent mortgage survey, High Demand, Higher Hurdles in the Mortgage Market.