MORTGAGE INDUSTRY TAPS TECH TO HELP BORROWERS UNLOCK HOME EQUITY
With the purchase market tightening, interest rates rising and refi volumes dropping, home equity loans and lines of credit (HELOCS) are a great way for lenders to grow their business.
In fact, the home equity lending channel has seen an uptick in originations, and it makes sense. Many homeowners have tappable equity in their houses right now, and HELOCs can serve as a phenomenal safety net. HELOCS can provide immediate access to funds for big-item purchases in cases like a natural disaster or funding college tuition.
HELOCs are also currently popular because they let homeowners access equity without having to relinquish the record-low rates on their first-lien mortgages. At a time when two-thirds of homeowners currently hold mortgages at or below 2.5 percentage points under current market rates, borrowing with a HELOC at 7% can be a smarter financial decision than giving up a 3% rate to refinance the whole loan at 6.5%.
This additional financial option is good for homeowners, which makes it good for lenders, as well. In this market, when it is difficult to find new homebuyers, home equity is key to retaining customers.
The majority of home equity loans are asset loans, and since they’re managed in-house without being sold to another lender, it means lenders can develop stickier relationships with customers. Credit unions know this and have long been leaders in the home equity sphere because of their relationship-based approach to lending. Banks and non-banks are getting on board now as well.
And while home equity may be the current hot-ticket market for lending, the technology is already in place to help streamline the lending process. With the right LOS, lenders can originate home equity loans on the same platform as mortgages, while following applicable regulations and getting the full perspective of your borrowers’ situations. A powerful servicing platform can offer the streamlined experience for HELOCs and first mortgages, while helping lenders reduce risks and enhance regulatory compliance. Couple that with powerful intelligence tools like AVMs, and lenders will be closer than ever to supporting borrowers in the growing home equity market.
Take advantage of today’s opportunities to grow home equity business by leveraging technology that stays in sync. An investment today can help retain customers and grow business. Turn to Black Knight and let us show you how to get started.