Mortgage companies getting closer to 'one-click' experience for buyers
Fintech companies Better and Tomo recently launched services to speed up the home loan process for borrowers.
Key points:
- Shaving days off the pre-approval and rate-lock process can be important, especially when mortgage interest rates are volatile.
- It’s part of a larger trend across the real estate industry to make homebuying more streamlined and less cumbersome.
Better, the fintech company that has funded more than $100 billion in home financing, rolled out its One Day Mortgage plan this month. Customers can go online, get pre-approved, lock in a rate and get a mortgage commitment letter from Better within 24 hours.
Better is one of many companies focused on streamlining the homebuying process from start to finish. Last month, the tech-enabled mortgage company Tomo launched its underwritten pre-approval service, which the company claims can be completed in minutes and with minimal paperwork.
Companies from portals and tech firms to brokerages have also been working to make homebuying less cumbersome for both agents and consumers, introducing products to improve listing content or investing in ancillary services to speed up the closing and title process.
The promise of a near-instant mortgage isn't just a good marketing opportunity — a quick rate lock could also help save buyers money, particularly when mortgage rates are volatile. In the latter part of 2022, for example, the 30-year-mortgage rate ballooned in less than three months, rising from 4.99% on Aug. 4 to 7.08% by Oct. 27.
In the news release, Better said it did a soft launch of the One Day Mortgage program to a small segment of its customers in early January and received a good response. The company reported that it has already processed more than $50 million in One Day Mortgage commitments, with customers receiving a commitment letter in an average of 12 hours. The new offering may be one way for Better to gain new customers in a challenging housing market that resulted in thousands of layoffs at the company in the spring of 2022.
"For my entire career, a one day mortgage has served as the holy grail for consumer finance companies to achieve and scale. With this launch, Better has developed its breakthrough offering," said Harit Talwar, Chairman of Better.
Getting pre-approved and locked in within a day would shave significant time off the transaction process for the buyer and potentially remove some roadblocks. When using a traditional lender, those steps can take up to 10 days and may involve a lot of back-and-forth between the purchaser and mortgage provider. The National Association of Realtors noted 32% of the problems in a home purchase transaction involve the financial process.