It could be argued that home ownership is an aspiration of most Americans. Owning a home is a symbol of the American dream – a feeling of accomplishment solidified by a brick-and-mortar place in which individuals and families live their lives. But for many people, the prospect of obtaining a home mortgage can be daunting. In the past, without the advantage of modern technology or the digital age, applying for a mortgage was much more cumbersome than it is today. Let’s take a look at the history of yesterday’s mortgage application, stepping back through the process from start to finish.
Once upon a time, your mortgage application process started out with a visit to your bank or lender, during which you sat across the desk from a loan officer (typically referred to as your LO) and expressed your desire to buy a home. In this interview, your loan officer likely asked a few questions designed to understand the basics of your financial situation, and then explained the different types of mortgages you could apply for and discuss current interest rates. There was no such thing as an online rate quote. Next, your LO provided the qualification requirements for the types of mortgages that meet your needs, including specific interest rates and fees. By the end of this meeting, if you had decided which type of loan you wished to pursue, your loan officer helped you to fill out a paper copy of a loan application to get the process started.
If you had prepared ahead of time, the application was easier to fill out than if you hadn’t known what type of information you would need to provide and back then, information was not as readily available as it is today. If not, you or your LO might have had to make multiple visits to provide all the necessary documentation. In the past, all documents were required to go through snail mail or were delivered by hand by borrowers and loan officers, with original signatures required for the authorization of each specific form. No faxing or scanning was allowed, and information could not be gathered by phone. At this point, you may have already spent long and tedious hours gathering and delivering all of the necessary documents.
Once your application was filled out and accompanying paperwork was amassed, your loan officer turned it over to the underwriting department, which verified that all information on the form was accurate. They then ran your credit to determine your credit rating and to determine if any other documentation or information is needed. If not, then final approval is given and a closing date determined. If you procured your home mortgage through a bank (vs. a direct lender), you might have faced a lengthy wait for approval even after your loan had been processed because banks met only monthly to approve loans through their boards of directors.
The bones of the modern mortgage application process are the same; applicants still submit an application and standard documentation before the information is run through the processing department and past the scrutiny of an underwriter. But as technology has advanced, the mortgage industry has been able operate with much greater efficiencies and makes the process smoother and more convenient for the borrower. In today’s mortgage world, obtaining a pre-approval is easier than ever. In many cases, the mortgage application can actually be filled out and submitted online without the additional step of having to visit your lender’s office. Certain information, such as verification of deposits and proof of employment can now be accomplished over the phone which was not allowed way back when. Loan officers are available to answer questions quickly via phone and email if you have any questions. And technological efficiencies have sped up the process from application to closing.
Most lenders in today’s mortgage world maintain an Internet presence with web pages that provide up front mortgage information and checklists detailing the documentation you will need to complete your application on your own. It is important to note that speaking with an experienced loan originator is truly the best way to ensure you are well prepared prior to completing your application. Some websites include a loan calculator that can give you a preliminary idea of what you can afford – of course, since there are various factors that can affect this estimate, again, very important to speak to a loan officer as early in the process as possible. And once your application is in the queue for pre-approval or approval, lenders maintain communication via email and phone, even personal texts to allow you to track where you are in the process and to quickly solicit any necessary additional documentation or information (added documentation requests are typically known as “conditions” in the mortgage industry). These new age efficiencies are less costly to maintain allowing lenders to keep costs down and offer lower rates – a big advantage to you as a consumer.
If you thought the process of obtaining a mortgage was daunting in the past, you’ll be pleased to find out how much more efficient and user-friendly it has become in the age of technology. With the streamlining of the modern mortgage application process via the Internet, faster delivery of documentation, and fewer need for face-to-face meetings, it makes more sense than ever to get started right away when you set your sights on the dream of home ownership.
