Fintech companies facilitate the “high friction process” by buying a home [Video]
During the pandemic housing boom, the increase in mortgage applications created a need for faster processing times in approval and processing of loans.
Fintech companies jumped into the market to fill the void.
According to Citi’s Home of the Future research series, there are many ways the technology industry can facilitate the lending and sales process for home buyers.
“There are many processes going on around mortgages – looking at borrowers’ income, documentation, verification and other aspects of enabling a borrower to get a loan to buy a home,” Roger Ashworth, head of Citi’s non-research agency MBS strategy team, told Yahoo Finance Live (video above), adding later: “Historically, it has been a process market with high friction … everything we can do to streamline this process is absolutely appreciated.”
Although the housing market has cooled down with the 30-year fixed mortgage rate of 5.30%, down from 5.70% the week before, there are still buyers in the market.
With prices changing weekly, home buyers who have not locked in rates will have to qualify again – making the home buying process even more lengthy.
Not only would a more efficient subscription process be beneficial for homebuyers struggling with rising prices, it could also help them save $ 1,000 to $ 2,000 in costs, Ashworth said.
Fintechs is also trying to make it less stressful to sell your home.
“When you think about moving from one home to another, you have to sell one home – it’s an emotional process. [with] a lot of friction involved, “said Ashworth.” There are companies out there that want to streamline this process by providing an instant quote to your home. “
Some of these fintech companies are also coming up with innovative ways for homeowners to leverage equity, which is especially useful for homeowners who missed out on refinancing with the low mortgage rates from earlier in the year.
“Businesses are willing to, instead of taking out a new mortgage, simply buy a portion of the equity for your home, for a share of the rise in house prices going forward,” Ashworth said. “There are many potential market shares across the board and many frictions that can be removed in the underwriting process of the real estate transaction process.”
Ronda is a senior reporter for personal finance for Yahoo Money and a lawyer with experience in law, insurance, education and government. Follow her on Twitter @skriverronda
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