A home mortgage, or a loan that enables individuals to purchase a home, is often the greatest financial transaction of a person’s life.
Securing a home mortgage can be a lengthy and frustrating process, requiring borrowers to provide personal and financial information to lenders for verification, underwriting, and loan approval.
To add to the pain, lenders often require borrowers to fill out and submit their mortgage application through a multi-step process that can involve printing and scanning documents, filling out forms by hand, and verifying information via email and/or over the phone—over the course of multiple days and sometimes weeks.
In an attempt to ease this pain, differentiate from competitors, and increase loan volume, traditional and progressive lenders have begun leveraging technology to build seamless online mortgage applications that work to meet strong demand for better customer experience.
In this article, we cover the best practices (and advantages) for lenders interested in better serving borrowers by offering an online mortgage application.
Best practices for building an online mortgage application
1. Ensure the mortgage application complies with regulatory requirements
Mortgage lenders are required to comply with a number of federal regulatory standards and laws, the most important ones being the Equal Credit Opportunity Act (ECOA) and Home Mortgage Disclosure Act (HMDA).
Applications should ensure necessary terms, agreements, and disclaimers are represented within the flow—most often as clearly visible footer text within relevant form steps—to provide transparency with applicants and avoid risk of penalties and fines. Information that cannot fit within the footer of a step should be linked to an exclusive page.
Additionally, lenders that offer phone support should strongly consider providing their support team’s phone number in the header of each step to help users that require live assistance.
2. Optimize for ease-of-use and intuitive navigation
Applications should provide simple and clear instructions on each step. Group similar questions, such as property information, personal information, employment information, and assets information, into single steps or dedicated sections.
Enable users to navigate to previous steps—using back buttons—so that they edit their information as needed and ensure accuracy by allowing users to save their progress, in the event they need additional time to source or check information.
3. Implement strong security measures to protect personal and financial information
Online mortgage applications collect personally identifiable information (PII) and highly sensitive financial information from borrowers. Your application should encrypt all data at rest and in transition. It should also adhere to best development and security practices, such as SOC 2, to communicate proper measures are in place to handle customer data with the utmost care.
4. Streamline the application process with third-party integrations
Automatically pull and verify the applicant’s employment and income details using a data enrichment integration like Argyle.
You can use this information to help calculate the borrower’s pre-approved loan amount and reduce the burden of needing the applicant to locate and provide these details mid-experience.
5. Provide real-time processing and approval status to users
Integrate with your online mortgage application with an API like CRS Credit API to soft-pull applicant’s credit scores from all major bureaus in real-time—removing the need to perform manual or hard credit checks and shortening the timeline to providing pre-approval to borrowers.
Upon submission, sync data with your applicant tracking system or CRM and configure automated emails to confirm successful submission, provide timeline and next steps, and share milestone updates and approval status.
6. Continuously analyze performance and improve
Identify where borrowers get stuck or drop off by integrating analytics tools like Segment. Then, test and make improvements to the identified areas to reduce dropoff and increase applicant completion rates.
Build a powerful online mortgage application with Feathery
Now, you can build your online mortgage application in a shorter time span and without significant developer costs using a powerful low-code builder like Feathery.
Feathery is a powerful form builder empowering new and traditional lending businesses to:
- Design an online mortgage application with fully flexible 2D visual editor
- Build personalized flows based on borrower responses using our logic builder
- Integrate with powerful verification and financial tools like Argyle and Plaid
- Connect to analytics apps to identify friction and boost applicant completions
- Extend with custom code and logic to meet unique processing requirements
- Automatically ensure data is handled properly by a SOC 2 compliant organization
Get started for free with our best-in-class online mortgage application template.
Conclusion
When building your online mortgage application, make sure to reference best practices to ensure you’re providing borrowers with a seamless, easy-to-use, and compliant application process.
Lenders that are able to implement best practices stand the best chance of serving borrowers, differentiating from competing lenders, and ultimately capturing more market share.
Ready to build your online mortgage application? Get started today for free.
Have questions about building an online mortgage application? Ask our Slack community.
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