Remote transactions, speedier mortgage approval times and eClosings make for sleeker and faster real estate deals.
Remote house purchases are becoming more common, according to a February 22, 2017 article by Jean Folger on Investopedia.com. The option a buying a home from afar—sometimes without ever setting foot in the property—appeals to those purchasing a second or vacation home, because these buyers often live in another state; even another country. Other clients that like the idea of not having to travel to shop for and buy a home include parents making the purchase for their children and real estate investors who don’t live nearby.
People buying homes remotely depend on real estate agents, arguably more than they would depend on an agent during the traditional in-person buying process. Real estate agents often have to represent these buyers during regular business hours, to oversee such things as home inspections. And these agents should have strong rapports with their clients, because the agents are often charged with finding suitable properties and understanding what remote buyers want and don’t want in a property, according to Investopedia.com.
A smooth remote transaction experience often means potentially tapping an agent’s local contacts, from lenders to appraisers. Folger cited the example of the importance of having a local lender for a remote transaction. A lender that isn’t local would be inclined to use an appraiser who isn’t local, which could threaten deals in especially unique U.S. markets, like Asheville, according to the article.
Financial technology’s impact on mortgage closing times
Financial technology, also known as fintech, could be a game-changer for speeding up mortgage lenders’ approval times, according to the article “Could fintech speed up mortgage closings?” published on NationalMortgageNews.com.
The targeted 21-day purchase-loan closing turnaround by traditional lenders might soon be considered slow. For example, Rocket Mortgage technology by Quicken Loans has been known to shorten closing time to a little more than 15 days for a purchase mortgage and a mere nine days for refinancing, according to the article.
However, transforming the traditional paper approach to only electronic isn’t widespread, as most mortgage companies use a mix of paper and technology to do business. And the reality, at least for now, is that while many lenders make it a goal to close within 15 to 21 days, it often takes twice as long, according to NationalMortgageNews.com.
To more easily disrupt traditional mortgage lending, which tends to be among the more complicated financial services, financial technology providers are partnering with traditional institutions, such as JPMorgan Chase, according to the article.
eClosings of the future
The eClosing, or the electronic closing of a mortgage loan, happens in a secure environment, in which some or all of the documents necessary for a closing are accessed and executed via the internet, writes Rachel D. Jaffe, vice president and senior counsel at OneTitle National Guaranty Company, in a November 29, 2016, article on Law.com. Today’s version of the eClosing tends to be more a mix of electronically signed and physically signed documents, according to Jaffe.
Benefits go beyond avoiding what seem like endless papers to sign at the closing table. Jaffe wrote that the eClosing process helps lenders achieve a more efficient, client-friendly process. Potential benefits to the environment are easy to imagine. Less paper means saving trees and less shipping means reduced CO2 emissions. There’s also the potential benefits to borrower privacy and protection. When done the traditional way, title companies and closers are among the people who have access to borrowers’ personal information, including social security numbers. In an eClosing, accessing the personal information would require a secure interface and provide an audit trail of who was able to see it, according to Law.com.
But the complete eClosing is not yet ready for prime time, primarily because of legal and regulatory hurdles. And applicable regulations and legalities, such as those affecting notarization, vary from state to state, according to Jaffe.
Have you ever sold a home remotely? What are your thoughts on electronic closings? Share with us!