What New Technology is Entering the Mortgage Industry?

The mortgage industry has evolved in recent years, and technology has been at the forefront. As the world becomes increasingly digital, borrowers prefer to do things online. 

This has led to the development of digital closing, a process allowing borrowers to sign documents online before closing. In our latest Lending Update, we touch on this topic, so let’s explore the concept of digital closing, its benefits, and the technology behind it. 

What is Digital Closing?

Digital closing is a process that allows borrowers to sign documents online before closing. Instead of going to a title company and signing every piece of paper, borrowers can sign documents online. 

This can save borrowers time and make the closing process more efficient. Most documents at closing do not require a notary, so that they can be signed digitally. This means that borrowers can spend as little as 10-15 minutes at the title company.

The Rise of Digital Closing in the Mortgage Industry

The push for technology in the mortgage industry began with loan origination. It was streamlined to become more efficient, faster, and better for borrowers. 

However, the closing process was left behind. In recent years, digital closing has become a reality, and it’s becoming accepted by the industry since it has the potential to cut costs, eliminate unnecessary positions, and speed up the funding process.

The Benefits of Digital Closing

Digital closing has many benefits for borrowers and lenders alike. For example, benefits include: 

• Saving time for borrowers by allowing them to sign documents online before closing
• Reducing closing costs for borrowers and lenders
• Eliminating the need for unnecessary positions in the closing process
• Creating E-notes, which are digital versions of physical notes that can be sent instantaneously to investors, speeding up the funding process and liquidity process of the industry
• Using digital signatures, digital notaries, and secure data transfer to ensure the closing process is secure and documents are protected from tampering or fraud
• Improving the efficiency of the mortgage industry and the closing experience for borrowers
• Expected to become widely adopted, leading to a cost-effective and efficient mortgage process.

The Technology Behind Digital Closing

Digital closing uses technology to make the process more efficient. The technology behind digital closing includes digital signatures, digital notaries, and secure data transfer. 

These technologies ensure that the closing process is secure and that documents are protected from tampering or fraud. Digital signatures are used to sign documents online, while digital notaries verify the signer's identity. Secure data transfer is used to send the signed documents to the lender or investor.

Bottom line

As more investors become comfortable with it, digital closing is becoming more widely accepted. It is expected to become widely used by the industry over the next few years, leading to a more efficient and cost-effective mortgage industry.

It’s an exciting development for the mortgage industry. The closing experience is critical. Borrowers are more likely to have a good experience if the process is streamlined and modernized. 

As technology evolves, the mortgage industry will continue developing, and digital closing is just one of the many innovations shaping its future.

Here are the graphs mentioned in the episode!