In April, the average mortgage loan closed in 41 days. But one lender? It did it in just 13.
Lenda, one of the few completely digital mortgage lenders on the market, recently wrapped up its fastest closing to date, seeing a cash-out refinance through to completion in just 13 days—the required legal minimum for refinance loans in the U.S.
If it hadn’t been for regulatory limitations, Lenda’s cofounder Jason van den Brand said his team could have closed the loan even faster. In fact, Lenda completed all its obligations—underwriting, appraisal, title and more—just five days from when the customer filled out the online application.
Still, a 13-day closing is a feat.
According to the most recent Ellie Mae Origination Insight Report, refinance loans took an average of 37 days to close in April—a full two weeks longer than Lenda’s recent closing. And purchase loans? They took even longer, closing in 42 days on average.
How It Happened
According to van den Brand, it all comes down to Lenda’s proprietary technology—a no-nonsense solution that cuts out the middleman and uses already existing data to its advantage.
“We have a predictive algorithm that determines what kind of documentation we’re going to need from each borrower profile based on underwriting,” van den Brand said. “You can do it all online. It took him I think about 35 minutes collectively from the time he hit our site to the time he finished.”
Lenda’s platform allows customers to connect data from their bank accounts, tax returns, appraisals and more to streamline the entire application and underwriting process. Customers can even electronically sign paperwork and have it notarized via webcam.
It’s this sort of seamless tech integration that sets Lenda, as well as other new fintech firms and startups on the scene, apart from more traditional mortgage companies.
“We can build these things so that we can connect people’s data with their bank accounts, with their tax returns, with their appraisal data, and so on and so forth, so we can make immediate decisions and not have to be trapped and stuck with paper,” van den Brand said. “A lot of these banks and mortgage banks are so big that, for them to change, it’s kind of like steering the Titanic. Unfortunately, there’s an iceberg ahead. That’s where they’re just woefully behind. It’s that hard for them to steer that ship away.”
Why It Matters
If speeding up a historically lengthy and burdensome process wasn’t enough, Lenda’s lightning-fast closing times also offer another major benefit for homebuyers: savings.
“What that really means for a borrower is our cost to produce the loan then goes down, and that means prices will come down,” van den Brand said. “We do it faster because of this technology, and that ultimately, allows us to shave the costs on the front, so, instead of paying a hundred bucks with retail, at a bank branch, you’re paying $50 online. That makes everyone happy.”
Until they can catch up time-wise, traditional lenders just can’t offer the cost-savings of more tech-driven ones, according to van den Brand.
“If you think about that in the grand scheme of things, time is money,” he said. “A borrower’s paying for that lack of time because the mortgage market’s changing every second. Speed is the best friend of every single customer out there. The faster you can get these deals done with a higher of accuracy, the more money you’re going save. It always winds up that way.”