Traditionally, a loan application was a slow and lengthy process. Prospective borrowers had to visit banks or mortgage lenders in person, dealing with numerous paper-based forms. However, with the digital shift across the financial industry, mortgage apps have become a fast and efficient solution. Streamlined applications, useful tools, and an enhanced UX have made them a new staple in the market.
The growth in popularity for mortgage software is rooted in the expansion of FinTech products, mobile penetration, and data analytics. The software has ample potential for simplifying complex procedures and accelerating loan clearance. Investing in such digital solutions is a clever choice for financial brands and enterprises planning to strengthen their market position.
This article will review the key steps and features for building an effective and competitive mortgage application.
The outlook of the mortgage app market
As digital transformation is reshaping the mortgage sector, online solutions are steadily gaining popularity. Software for mortgage is taking over the industry with its fast and client-centric service, better visibility, and expanded options. The optimized application and approval elevate the experience for borrowers and lenders alike.
The digital lending market is predicted to boost 13.8% CAGR by 2026, reaching an estimated $20.5B. This is almost twice as large as the 2021’s $10.7B, which illustrates the great potential of mortgage software solutions. Mortgage rates in the U.S. are anticipated to decline throughout 2024, and this will provide more opportunities for borrowers.
Let’s review the core trends that are shaping up the industry and its future:
Active digitalization
Millennial & Gen Z customers are eagerly embracing digital banking, and mortgages are no exception to this rule. In fact, the Millennial age group has made the biggest home buyer share from 2014 to 2022. Mortgage lending software wins over the conservative application procedure by being simple, more transparent and streamlined.
Taking mortgages online is a natural progression for any banking client that prefers managing their finances from a smartphone. Consequently, financial services providers are working to enhance their digital offerings.
AI/blockchain
Artificial intelligence and machine learning tools can expedite the management of loan applications up to mere seconds. Smart document management, fraud detection, and predictive analytics boost the general experience for both parties. The data-centric approach to lending promotes fine-tuned strategies and thoughtful decisions.
As for blockchain-driven lending platforms, they are lauded for the upscale UX and lack of intermediaries. Such mortgage platforms offer a suitable virtual space, where lenders can contact borrowers directly and vice versa. Transparent and efficient, they enable global accessibility and economic inclusion.
Open-banking APIs
Previously, lenders were affiliated with a few vendors of loan organization systems (LOS). While offering a comprehensive set of services, such systems could be difficult to adapt to specific business needs. The main reasons for this issue included non-flexible workflow, sluggish upgrade cycles, and low customization potential.
The adoption of open application programming interfaces (APIs) has allowed vendors to design highly customizable future-proof platforms. By implementing upscale rules engines, low-code workflow, and analytics tools, they are now able to drive higher efficiency. Incidentally, the market capitalization growth for companies using APIs was 12.7% higher over a 4-year period.
The benefits of building custom mortgage software
Custom mortgage apps give lending institutions a strategic advantage by being tailored, effective, and user-centric. Developing mortgage software enables addressing the individual requirements of loan applicants. Innovation opportunities and boosted satisfaction are the key motivators behind adopting mortgage automation.
Let’s assess the core advantages of customized mortgage software:
Data protection and compliance
Custom mortgage applications can incorporate upscale security features for safeguarding sensitive borrower data. Such technological solutions as encryption, access controls, and data backups help maintain trust with borrowers, expanding the outreach. An important component of data safety in this case is legal adherence, realized with integrated compliance modules.
Custom mortgage loan software is ideal for meeting the sector’s compliance requirements, such as data security, anti-prejudice, and client protection. Both lenders and brokers would welcome protection from legal repercussions and conflicts. That is where customization can make a substantial difference, transforming the mortgage industry in a positive and more inclusive way.
Enhanced sales and mortgage rates
Automated software can facilitate many procedures, including the initiation of reporting. It can generate more reliable and comprehensive reports for different stakeholders (home buyers, investors, etc.). In this way, a lending enterprise can offer their services to more clients, boosting the sales and mortgage numbers.
Another strong point of mortgage broker software is its accuracy. The tasks and estimations completed by such software minimize the likelihood of human error in processing applications.
Moreover, built-in validation checks secure that all input data is complete and relevant. This involves checking the borrower and real estate specifics, income figures, and credit grades.
Optimized data administration
Both lenders and brokers can profit from more transparent data in their judgments. This can offer valuable assistance in pinpointing the trends, monitoring performance, and fine-tuning loan methods. Mortgage management software offers data solutions that are customized to the specific requests of parties involved.
A centralized repository for borrower-related data (loan applications, financial documents, etc.) can facilitate the accessibility of relevant data. Electronically stored documents are also easier to manage, reducing manual paperwork.
Moreover, bespoke software can automatize mortgage application steps, from submission to verification and underwriting.
Procedure optimization
Tailored software for mortgage brokers plays a pivotal role in enhancing productivity and minimizing errors amid transactions. Instead of dealing with the documents and other data by hand, lenders can entrust it to digital assistants. As a result, the chance of errors and lags goes down significantly, making for quicker and more accurate approval flow.
On top of this, procedure optimization allows loan providers to quickly adapt to industry changes and customer expectations. The flexibility of mortgage automation software makes it easier to modify and update for revised regulatory requirements or industry trends. Subsequently, lenders can beat the competition and capitalize on emerging opportunities.
3 instances of successful mortgage apps
Mortgage apps have reshaped the home loan market with their convenient availability of services and efficient tools. Different apps showcase unique approaches, reinforcing their competitive edge and popularity with users. Building customized mortgage software is done best by acknowledging the productive experience of the sector leaders.
Below are examples of mortgage apps that are successful and innovative:
Molo
Debuted in 2016, this mortgage service collected an impressive £3.7M in the course of their initial funding. The platform has managed to streamline mortgage processing by minimizing the necessity for user documentation. The result is a client-centric, fast, and open solution for mortgage applications.
One of the essential aspects of Molo is its automated advisory system. By utilizing data analysis, it strives to add propositions that cater to various customer groups. Such offers may include mortgage products, financial planning, repayment tactics, and more. This cutting-edge approach results in a more streamlined mortgage application, empowering the borrowers.
Thanks to its passion for development, Molo was selected as a finalist for the 2023 Fintech Innovation Award.
Morty
This mortgage broker has come up with a full-featured smartphone app. Its popularity is rooted in a broad selection of mortgage solutions, as well as individual counsel on mortgage selections. It also boasts a fast and painless application procedure.
What sets this app apart from the competitors is the live application progress tracking. Users can follow each and every step, from submission to the final approval. They can receive timely alerts on any changes or updates, which makes their endeavor a lot less stressful. Reduced uncertainty and improved transparency create a better and smoother customer experience.
As of December 2023, Morty has processed more than $2B in loans since its launch.
MoneyPark
This online platform serves as an intermediary between clients and banks, embracing mortgages as well as insurance services. Its user-centric features include a complimentary calculator and comparison utility for pinpointing the top mortgage deals.
MoneyPark excels at streamlining communication with banking representatives and consultants to support more informed choices.
The mortgage app offers an upscale integrated CRM system to its users. Engaging with 150+ associates, it creates a B2B environment that facilitates collaboration.
The effective network of establishments, brokers, and other partners supports information exchange, application submission, and deal status tracking. This enables the platform to provide more customized services, boosting loyalty and retention.
The success and popularity of MoneyPark is grounded in its innovative approach, upscale technologies, and a high level of personalization.
Must-have features of custom mortgage software
While highly customizable, mortgage lending software solutions must incorporate basic features that optimize operations and boost experiences. This will allow users to take full advantage of their mortgage software of choice in an easy and effective way.
Let’s explore some of these core features in depth:
Registration and user profiles
The registration flow should be fast and easy, offering multiple sign-up options. Email address, social media profile, or contact number are among the top popular methods of joining in. Striking a good balance between user-friendliness and safety is always important for the registration funnel.
Customer profiles on a mortgage platform should contain the basic data (personal details, photographs, real estate descriptions, etc.). It is essential to provide sufficient space for all the data required for future credibility assessments. The possibility to edit or delete such data must also be present within the app.
Loan request form
A user-centric request form enables applying for a home loan successfully and not seeking assistance from the help center. The sections that might be complex or confusing should be briefly explained, possibly with pop-ups. The ultimate goal of such a form is to seamlessly guide clients through the entire mortgage application procedure.
A thorough loan request form should incorporate such fields as personal details, financial data, real estate details, and financing options. It should also be customizable to allow for various kinds of mortgage products and lending criteria. Ideally, it should support document uploads as well as electronic signatures for smooth requisition.
Mortgage calculator
This tool enables a primary credibility assessment on the basis of client earnings and employment data. Its other purpose is to filter out the unsuitable candidates at the primary stages. The feature is also utilized for planning out budgets and contrasting various credit options.
When calculating monthly payments, such aspects as loan rates, insurance premiums, real estate taxes, etc., are taken into account. This helps users quickly determine the estimated payment, with the inclusion of principal, interest, and any additional costs. In such a way, borrowers can always choose the most fitting alternatives.
Mortgage tracker
Being unable to monitor one’s mortgage application progress could lead to unnecessary stress. With the help of a tracker, clients can view their progress immediately and get early updates. In addition, such a tool can decrease the load on support.
The key functionalities of a mortgage tracker should include status updates, document verification, and adequate means of contact and workflow administration. This promotes openness and productivity amid the approval process, bringing on a more streamlined user experience.
KYC identification
Know-Your-Customer identity verification is utilized to check the candidate’s credit profile and confirm their ID, possibly via face recognition. Such automated checks help reduce fraud and preclude penalties, ensuring the fulfillment of the Anti-Money Laundering and Bank Secrecy Act policies.
The KYC verification system can also conduct risk assessments of the candidates. Various aspects such as credit record, career position, or potential red flags are analyzed before the final verdict. This method upgrades the accuracy and consistency of assessment, protecting lenders’ interests.
Customizable offers
Mortgage broker software configuration and rate customization are vital for retention efforts. By incorporating the loan rates, preferred real estate type, and payment capacity, unique offers can be proposed to segment clients. As a result, the latter are more likely to accept such deals.
One way to satisfy specific client groups is by implementing pricing and rate customization. This allows lenders to adjust their pricing tactics and loan rates depending on applicant profiles and overall market conditions. They can then review the rules and margins, giving borrowers more transparency.
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7 steps to building custom mortgage software
Mortgage software development presupposes thorough preparation, technical knowledge, and deep understanding of the lending industry. To bring one’s idea to life, certain steps must be followed for maximum productivity.
Let’s examine the key stages of developing a custom mortgage app:
1. Market analysis
Step number one is researching the target demographics. Pinpointing demands and offering correct features is the path to a more competitive financial product. Once the disparities are known, it is easier to devise and apply a software development roadmap.
Understanding mortgage market dynamics and client expectations leads to improved decision-making on the app’s functions and layout. The end goal is to make sure that the software for mortgage lenders meets current demands and can offer substantial value.
Additionally, market research can help recognize the opportunities for further innovation.
2. Regulatory compliance
One of the top problems for a financial services provider is conformity to the latest industry criteria and guidelines. Mortgage compliance is paramount to any financial entity. Accordingly, mortgage software must follow local laws and reflect regulatory updates.
The important U.S. regulators protecting mortgage stakeholders include HMDA, NCUA, and ECOA. Following their requirements will eliminate penalty risks for mortgage apps.
3. Monetization model
The user needs identified during market analysis shape the monetization principles within an app. The typical models for lenders would be loan price charges, lender commissions, monthly payment shares, and loan sales. However, there exist more ways of monetizing mortgage software for brokers, i.e. subscription- or transaction-based models.
Subscription-based monetization is done via subscription plans with assorted features and pricing tiers. A transaction-based model involves a charge for every completed transaction. The end choice would rely on the condition of the mortgage lending market, direct competition, and software value proposition.
4. Mobile-first user experience
As nearly 80% of customers use mobile apps for their financial needs, an upscale user experience becomes a must. Mortgage app development presents a number of UX challenges, namely, displaying financial information on a smartphone screen. Overcoming such obstacles will lead to enhanced brand loyalty and higher retention rates.
The key aspects of a mobile-centric UX include the following:
- responsive design and interface;
- simplified navigation;
- minimized load times; and
- mobile-specific features (document scanning, click-to-call, etc.).
5. Data security
The importance of data protection for a mortgage app cannot be overstated. Since such apps deal with confidential information, safety must be the key priority. Developers should address the major threats, including cross-site scripting (XSS), SQL injection, and unauthorized entry.
One way to enforce data safety when building a mortgage app is by utilizing advanced encryption techniques alongside signature technologies.
Encryption helps secure data in transit as well as at rest, minimizing the likelihood of interception or unwarranted access. Multi-factor or biometric authentication is a powerful instrument for verifying user identity and preventing breaches.
6. Multiple integrations
Superior mortgage apps should support integration with various external systems: credit reference agencies, loan management, and more. The integration should be smooth and user-focused to avoid decreased retention rates. Connecting an app to payment systems, E-wallets, and banking services can greatly facilitate loan application.
For instance, payment gateway integration allows for scheduling and making payments related to the mortgage. It also displays payment history directly within the app, enhancing its convenience and flexibility.
Consequently, lenders can streamline payment processing, thereby improving operational efficiency.
7. Mortgage platform MVP
Creating mortgage software can be quite challenging, so it is more effective to start with introducing a minimum viable product. An MVP allows for checking the operational and commercial effectiveness with the real demographics. Upon collecting feedback, it will be possible to fix things prior to releasing the app publicly.
A custom mortgage app MVP should contain several essential components as a functional prototype. These components may include user authentication, loan request form and tracking, interaction channels, compliance framework, and more. They are utilized to address the key demands of the stakeholders.
In conclusion: How to create mortgage software
Mortgage apps are actively reshaping the lending industry. Fast, client-centric, and feature-rich, they facilitate the loan application procedure and establish direct connections between lenders and borrowers.
Their adaptability and great capacity for customization blend innovation with enhanced UX. The new software is an effective asset for boosting mortgages in an intense business environment.
The top benefits of custom mortgage apps include the following:
- data safety and legal commitment,
- amplified sales and mortgages,
- improved data administration, and
- procedure optimization.
Looking for mortgage software outsourcing solutions with strong market potential? Our expert team is ready to create a uniquely customized app with upscale features and active user involvement. Contact us for more information on how we can assist you with your venture.
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