Mortgage lending operations find themselves in a tight spot in 2019. The average profit per loan continues to fall, higher interest rates are scaring homeowners away from refinancing, and non-bank lenders now make up more than half of the market.
Lenders braving these challenges need to execute their loan processing with efficiency, precision, and speed. Lowering costs also becomes essential for improving the bottom line. The housing market, though not exactly sizzling, is warm enough that buyers are still looking for homes. Lenders that rein in costs can take advantage of the current market and deliver a personal, professional touch superior to that of a non-bank lender.
With that in mind, here are three strategies for lowering mortgage lending costs.
One way for lenders to increase profits is to increase the volume of loans originated. Unfortunately, the technology some lenders use isn’t up to the task, and software that should be streamlining processes can actually slow things down. Switching to an advanced, modern LOS automates more of the origination process without adding complexity to users or to the tech stack.
The best software features robust workflows, standard and custom reporting, eClosing and mobile interview capabilities, automated audits, and seamless integration with outstanding third-party solutions that are efficiently accessed from within the LOS. Great software also makes life easier for borrowers, who require less time to complete forms and aren’t bothering the lending team for information they can access on their own. The accumulated time saved from all these benefits allows mortgage lenders to close more loans—and improve their bottom lines.
A comprehensive LOS offers the best of both worlds by providing streamlined system access to users across locations, document storage for easy retrieval and review, centralized data, and excellent security. Also, mobile tools benefit borrowers and allow them to get you the documents and information you need without necessarily visiting a branch. The result? Increased approval speed, decreased origination costs, and an improvement in the quality of your portfolio.
Over the past several years, federal lending rules and CFPB regulations have tightened considerably. The extra diligence that mortgage lenders must undertake slows down the origination process and increases the number of disclosure requirements. As a result, lenders often spend more time wrangling with the same number of applications.
Optimizing compliance responsibilities can give back some of that time, which can then be devoted to serving more borrowers. A good LOS can also help with this cost-saving strategy by incorporating (and continually updating) compliance rules into the software, providing error feedback to decrease the number of inaccuracies, and improving overall efficiency.
One other consideration as you look to lower costs: It’s important to choose an LOS provider that is willing to be a partner in your success. An experienced provider not only delivers software rooted in accuracy, reliability, and efficiency, but also brings credibility built over decades of being a leader in mortgage technology. With a great partner, your operation stays ahead of the curve rather than continually trying to keep up with it—and that advantage can be instrumental in lowering mortgage lending costs.