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Applying for a home loan can be a long, cumbersome process. You have to pick the kind of mortgage you want, apply for the loan, and provide lots of documentation. Then you need to make important decisions such as whether to lock in your loan rate.
Traditionally, many people desired in-person help from a mortgage loan officer. But things are changing. In fact, a growing number of Americans prefer all-digital mortgage loans.
A recent survey from Discover Home Loans found borrowers' preferences have changed during the pandemic. More people than ever want to complete the mortgage process from the safety of their computer rather than visit a lender in person.
All-digital mortgage loans are growing in popularity
Prior to the COVID-19 pandemic, 57% of homeowners said they'd prefer to apply for a mortgage loan in person, according to Discover. Now, that number has dropped to 50%. Further, just 43% preferred to go through the full borrowing process online prior to the pandemic, whereas now, 50% would rather do it over the internet.
This represents a marked shift, and Discover indicates homeowners have changed their minds about whether they prefer an all-digital experience at every step of the borrowing process. A growing number now want to do the following online:
- Complete applications
- Review loan obligations
- Submit documents digitally
- Schedule closing
Many people don't want to do these steps in person -- they want to take out home loans from their computers.
These aren't just hypothetical preferences either. Homeowners are actually following through and completing more tasks virtually. In fact, Discover indicated 98% of people who secure its home loans now use its website to provide information and track each phase of the process. Further, eight in 10 borrowers start their applications online.
It's no surprise borrowers prefer to avoid visiting a bank just to get a mortgage -- especially as the amount of documentation required for loan approval could potentially mean multiple visits. The pandemic has undoubtedly encouraged many more borrowers to embrace digital applications, but the shift probably would have happened anyway.
Americans now handle many aspects of their money management on the internet. And once people see how simple it can be to apply for a mortgage online, the trend toward all-digital mortgage loans is unlikely to reverse.
Is an all-digital mortgage loan right for you?
While an all-digital mortgage loan can be a lot more convenient -- and a lot safer as the coronavirus pandemic continues -- it's still not necessarily the optimal choice for everyone.
You might want to talk through loan options in person to get more help than a phone call or online chat can provide. If that's the case for you, you may want to look for a lender that still provides the chance to meet with a loan officer face to face.
But you may be a seasoned home buyer or homeowner who is comfortable with the mortgage application process. If so, there's a good chance you'll find yourself among the majority of homeowners who believe an all-digital experience is the way to go.
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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. Christy Bieber has no position in any of the stocks mentioned. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.
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