The housing market was on fire last year. Home prices hit a 14 year high, and buyers engaged in bidding wars and submitted above-asking-price offers. At the same time, loans took far longer to close, making it harder for borrowers to compete in the extremely tight market. Buying a home is already a stressful process, but last year was one of the most challenging on record.
Borrowers Saw 50% Longer Close Times in 2020
In January of 2020, it took an average of 45 days to close a purchase loan and 38 days for a refinance loan. By October of 2020, those times had gone up to 54 days for purchase loans and 57 days for refinances. That means buyers waited 20% longer for purchase loans and 50% longer for refinances, just when the demand for homes was at its highest for the year.
Some refinance loans and loans with larger banks and credit unions took as long as three months to close. With these extended closing times, many borrowers were at a disadvantage. Real estate agents report that some sellers refused to accept offers from buyers using lenders that have notoriously long close times.
On the other hand, lenders that deliver shorter close times help borrowers compete with other buyers for the same house. Meeting a buyer’s needs in this way gives lenders a competitive advantage in this quick-moving, seller’s market. Here’s the good news: lenders can shorten close times by digitizing the overall lending workflow.
The Solution: Streamline the Workflow With Technology
Digitization of the overall lending workflow eliminates capacity constraints and solves the problem of extended close times. From the first contact through to closing, lenders need the tools and technology to streamline the many steps along the way. Here’s a quick look at a just few of the ways technology can shorten close times:
- Improving Communication
With automation and AI technology, communication is simplified. Loan officers save about 70-minutes per applicant because they don’t need to waste time trying to track applicants down. In turn, customers can engage when and how they want, which results in increased transparency and satisfaction.
- Nurturing Leads Efficiently
By working with the right customers, or those prescreened with lead scoring and AI technology, loan officers save an extraordinary amount of time. Tools like Home Captain’s automated concierge engage with customers in mass, answering questions, and developing relationships. When the questions are out of the way and the lead is ready to act, they are handed off to the lender for their purchase, sale, or refinance transaction.
- Delivering a Digital Close
With a complete eClosing, including RON, lenders offer a faster and smoother experience for borrowers. With the right platform, borrowers can review and sign their loan package and eNote without coordinating schedules and traveling to a closing appointment. eClosings also reduce risk and errors by eliminating manual processing steps.
An organization enjoys a competitive advantage when they deliver services better than its rivals. In turn, competitive advantages drive more sales, better profit, and greater overall revenue compared to other players in the market. Lenders should make shortening their close times a priority for 2021, as doing so will create a competitive advantage in a market where it’s tough to compete on rates alone.
The lender challenge we outlined can easily be overcome by using available tools and technologies for more efficient workflows. If you’d like to learn how Home Captain’s conversion optimization system and AI technology will shorten your close time, click here or reach out to us today.