Fintech innovation around digital payments reduces costs and expands access for individuals.
Have you ever heard of fintech?
Maybe not, but many people are familiar with companies like Lending Club and SoFi – two of the most successful Fintech financial services.
These two companies alone have helped lower the barrier to entry for obtaining a mortgage by up to 50%. How? By making the process more transparent and giving consumers access to multiple offers at once.
This article is going to discuss how Fintech has changed the mortgage industry.
#1 Fintech has made it easier for people to shop around for the best rates and terms on loans
One of the biggest problems people face when applying for a mortgage is knowing how much they’re qualified for, let alone which banks offer what rates.
What fintech has done (and continues to do) is make it easier for people to shop around for mortgages by accessing multiple offers at once.
It’s also made it easier for people to see how much money they’re qualified for by organizing the mortgage process into a series of simple questions.
#2 This increased competition is driving down prices and making mortgages more accessible to everyone
Equally important as knowing what you’re eligible for is knowing where banks are offering their best rates. Fintech has made this possible by allowing people from all over to compete for one another’s business.
This increased competition has made it so that banks aren’t just competing with the bank down the street but with lenders from around the country and around the world.
And while some argue that this is unfair to local banks, it can also be argued that it’s a good thing because it creates competition and drives down prices.
Plus, even people who are self-employed or had a bankruptcy in their past can now qualify and get a mortgage thanks to loans for self employed and bad credit home loans.
#3 Fintech companies are also innovating in other ways by bringing new products like home equity lines of credit (HELOC) or reverse mortgages into the market, which were previously unavailable options
Even though fintech has successfully brought affordable rates to consumers, there are still a number of products that have been difficult to access for people without the required credit or documentation.
But fintech has been gaining traction in new areas, such as giving consumers more access to home equity lines of credit (HELOC) and reverse mortgages.
That’s because these two loan options have largely been bank products, which means that they are only available to those who already have good credit or substantial assets.
#4 Successful startups that have made waves in this space
Some of the most successful startups in the space include Lending Club, OnDeck capital, and SoFi.
Lending Club was one of the first companies to give consumers access to multiple lenders at once, giving them a competitive advantage right from the start.
In contrast to fintech startups lending money directly to consumers, OnDeck Capital lends money specifically to small businesses.
SoFi was initially started as a social network for graduate students but created mortgages and other types of loans for graduates looking to purchase homes.
While Lending Club and OnDeck Capital remain successful companies today, SoFi has since become a traditional banking institution after going public in 2015.
All in all, Fintech has made a big impact on the mortgage industry by increasing competition between lenders and giving consumers access to more information about available products.
In the future, Fintech companies will continue to innovate and create new products that benefit consumers and the financial industry as a whole.
Fintech has even opened up opportunities for entrepreneurs to create new businesses around this industry.
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