Associates Home Loans Explains How Fintech Changed the Mortgage Industry
by Analytics Insight
November 24, 2021
Fintech innovation around digital payments reduces costs and widens access for individuals.
Have you ever heard of fintech?
Maybe not, but many people are familiar with companies like Lending Club and SoFi, two of the top performing fintech financial services.
On their own, these two companies have made it possible to lower the barrier to entry for obtaining a mortgage by up to 50%. How? ‘Or’ What? By making the process more transparent and giving consumers access to multiple offers at the same time.
This article will discuss how Fintech has changed the mortgage industry.
# 1 Fintech made it easier for people to find the best loan rates and terms
One of the biggest issues people face when applying for a mortgage is how much they qualify for, let alone which banks offer what rates.
What fintech has done (and continues to do) is empowered people to shopping for mortgages by accessing several offers at the same time.
It also makes it easier for people to see what amount they qualify for by organizing the mortgage process into a series of simple questions.
# 2 this increased competition drives down prices and makes mortgages more accessible to everyone
Just as important as knowing what you are entitled to is knowing where the banks are offering their best rates. Fintech has made this possible by allowing people everywhere to compete for each other’s businesses.
This increased competition has meant that banks are not only competing with the local bank, but with lenders across the country and around the world.
And while some argue that this is unfair to local banks, it can also be argued that it is a good thing as it creates competition and drives prices down.
In addition, even those who are self-employed or who have filed for bankruptcy in the past can now qualify and obtain a mortgage loan thanks to loans for self-employed workers and home loans for bad credit.
# 3 Fintech companies are also innovating in other ways by bringing to market new products such as Home Equity Lines of Credit (HELOC) or reverse mortgages, which were not previously available.
Even though fintech has been successful in offering affordable prices to consumers, there are still a number of products that are difficult to access for people without the required credit or documentation.
But fintech has gained ground in new areas, like giving consumers better access to home equity lines of credit (HELOC) and reverse mortgages.
Indeed, both of these loan options have been largely banking products, meaning that they are only available to those who already have good credit or substantial assets.
# 4 Successful startups that have made waves in this space
Some of the most successful startups in the industry include Lending Club, OnDeck capital, and SoFi.
Lending Club was one of the first companies to give consumers access to multiple lenders at once, giving them a competitive edge from the start.
Unlike fintech startups that lend money directly to consumers, OnDeck Capital lends money specifically to small businesses.
SoFi was originally created as a social network for graduate students, but has created mortgages and other types of loans for graduates looking to buy a home.
While Lending Club and OnDeck Capital remain successful businesses today, SoFi has since grown into a traditional banking institution following its IPO in 2015.
Overall, Fintech has had a big impact on the mortgage industry by increasing competition among lenders and giving consumers access to more information about the products available.
Going forward, fintech companies will continue to innovate and create new products that benefit consumers and the financial industry as a whole.
Fintech has even opened up opportunities for entrepreneurs to create new businesses around this industry.
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