Mortgages adapt to the 21st century as more and more mortgage lenders offer their services online.
The New York Times reports that investments into online mortgage vendor start-ups are increasing, as potential home buyers from the “millennial” generation demand online services for acquiring a mortgage. Jason van den Brand, the CEO of Lenda, an online mortgage lender based in San Francisco, says that the next generation of homeowners desire the “ease of use and transparency” that the online services they have become accustomed to offer.
“They do not want to go through the same methods that their parents went through,” he remarked.
A recent survey conducted by Discover Home Loans confirms his conviction. More than half of current home buyers claim that they filled their mortgage applications online, and more than 70% claim to have submitted mortgage documents to a lender online via email, an app, or a website.
“We offer both processes for mortgage lending so we can serve both sides. For the online shopper who wants multiple quotes, we offer that hands down. But there is still a demand for the traditional method of lending, where the client wants to sit in front of their lender, and we totally get it,” said Joe Hendrix, director of marketing for Homerate Mortgage in Tennessee. “People want to test the integrity of the person their borrowing hundreds of thousands of dollars from, so we have both process in place, and we also see a client who wants a hybrid of the two. We’ll always offer both.”
Although sites such as Bankrate and LendingTree already offer online services for the mortgage process, these sites only offer leads to choose from. In constrast, sites like Lenda enable borrowers to complete the entire mortgage process online (with the exception of final documentation in need of notarization, which is done in person).
“Most can select their rate quote, fill out their application, upload their documents and electronically sign the paperwork right on the website,” van den Brand said.
Although Lenda’s services are popular, its operations are limited to California and Washington State, and it only offers refinance mortgages. However, the company plans on adding other kinds of mortgages, including purchasing mortgages, and hopes to expand to other states — and potentially nationwide — by next year.
The company recently raised $1.5 million in seed funding to do just that.
Another online mortgage site based in San Francisco, Sindeo, is more like a mortgage brokerage firm with mortgage advisers when compared to Lenda. Sindeo has a partnership with 38 lenders for their clients to choose from, and it hopes to expand its network to 70 lenders by the end of this year, including adding known retail brands and specialty lenders.
The advisers at Sindeo are discouraged to focus on borrowers who want larger loans by paying them a flat-rate fee for every deal they close, as well as offering bonuses based on customer satisfaction rather than gross commission.
Sindeo intends to allow its customers to apply online in April and to spread its consumer base outside of California to at least six other states, including New York.
Nick Stamos, the CEO of Sindeo, remains confident that as e-signature and e-closing technology improves, his company will become even more popular with the consumers. Sindeo can, after all, “build [its] platform based on the future and not the past,” Stamos said.