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What is a digital mortgage process?

Using an online process could save you time and money

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Nearly every task we do today looks different from a few decades ago. From how we shop to how we manage our finances, an array of digital tools and platforms make many transactions faster and smoother.

The digital mortgage process is one of these improvements. In the past, borrowers had to apply for a mortgage in a loan office and submit a paper version of every piece of required documentation. Today's mortgage applicants can take care of the bulk of the mortgage process from the comfort of their homes.

If you're wondering how the digital mortgage process works and what you need to get started, read on to learn more.


Key insights

  • A digital mortgage is a home loan with an entirely virtual application and underwriting process.
  • The digital mortgage process has many of the same steps as the traditional one.
  • Applying for funding online has many benefits, including convenience and accessibility.

What is a digital mortgage?

A digital mortgage is a home loan with an entirely virtual application and underwriting process.

For example, America's largest mortgage lender, Rocket Mortgage, originates all of its mortgages through its online platform. This company doesn’t have any brick-and-mortar locations. Instead, the mortgage process happens online (with the potential for some communication over the phone).

Stan Leonard, a loan officer at the national lender Guild Mortgage Company, says today's digital mortgage starts off much differently from years ago.

"We joke about it, but the mortgage process was sometimes done with applications taken on napkins," said Leonard, adding that busy loan officers would hand these to their assistants so they could begin making a list of documentation the buyer would need.

Today's digital mortgage application makes the loan underwriting process smoother and faster.

What is the digital mortgage process?

The digital mortgage process has many of the same steps as the traditional one. As an applicant, you still undergo a credit check and must provide income statements, bank statements, proof of employment and a summary of assets and debts.

However, in the digital mortgage process, you apply for a mortgage online instead of on paper, and typically upload any required documentation to a secure portal.

In addition, many tasks once completed by loan officers decades are now automated, including underwriting. Today, software programs take mortgage application details and use third-party services to verify data and approve the loan.

"Once everything is cleared by underwriting, the borrower can sign their loan docs and close," Leonard, from Guild Mortgage, said. From there, the final stages of a home purchase can also be completed online.

"With mobile notary services, it’s quite possible for a buyer to take an application, get an approval, sign their loan documents, wire their funds and close all from the comfort of their home," Leonard said.

What are the benefits of a digital mortgage?

The main benefit of a digital mortgage is that it’s convenient for everyone involved. The buyer avoids the extra time, effort and expenses of driving back and forth to the bank or loan office. Mortgage officers have less grunt work and can focus on other aspects of their jobs.

Another benefit of the digital mortgage process is accessibility — anyone can apply for a mortgage and get funding no matter where they live (as long as the lender services the area). Applicants in remote areas don't have to drive into a big city to apply for a mortgage and deliver documentation. Those with limited mobility or disabilities can avoid the inconvenience of having to leave their homes to deal with their mortgage application.

Online mortgages are also easier to shop for, especially when you’re comparing rates and terms across multiple lenders. The best online mortgage lenders allow you to research rates and available loan options from home. This gives you a good idea of your home loan options so you can apply for the best one.

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    FAQ

    What is a fully digital mortgage?

    A fully digital mortgage is a home loan with an entirely virtual application and underwriting process. Applicants upload documentation for their home loan through a secure portal, and closing occurs at the place and time of the buyer's choosing.

    What credit score do I need to get a digital mortgage?

    Credit score requirements for digital mortgages vary, just as they do for mortgages you apply for the traditional way. That said, you typically need a credit score of at least 620 to qualify for most mortgages, whether you apply in person or online.

    How much time can I save with a digital mortgage?

    The amount of time you'll save with a digital mortgage depends on the complexity of your home loan application and how much information you need to supply. However, you can likely expect to save several hours you would otherwise spend driving and delivering documentation.

    Bottom line

    Digital mortgages can save you both time and money. They make it easier for you to shop around for the best deal and avoid driving all over town to gather and provide information for your application.

    Many of the best mortgage lenders offer the option for a digital mortgage, making this a great way to go if you're busy and want to use your time efficiently.

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