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How Custom Software Development Empowers the Mortgage Sector

An increasing number of lenders across the mortgage industry are relying on ready-made solutions — third-party apps that can integrate into existing operations and provide a superior customer experience. More serious competitors, however, will go for custom mortgage software development.
Daniel Zacharias

Code Power Team

January 4, 2024

An increasing number of lenders across the mortgage industry are relying on ready-made solutions — third-party apps that can integrate into existing operations and provide a superior customer experience. More serious competitors, however, will go for custom mortgage software development.

Before you decide which type of fintech (financial technology) you should opt for, let’s examine the state of the market. Next, we’ll cover the benefits, as well as the ways to implement the tech into your operations.

Crunching the numbers

Arguably the most compelling argument for joining the trend is the numbers. The digital lending market will likely reach $20.5 billion by 2026. This is a growth rate of 13.8% CAGR. This dramatic rise is largely due to the boom in the US market which has withstood the hit of COVID, the war in Ukraine, and every other recent global crisis.

The truth is that this sort of tech is bringing benefits to both lenders and borrowers. Customer demand for accessible financial services is at an all-time high. We’re talking about first-time buyers as well as those assembling large real-estate portfolios.

Considering custom vs. ready-made

Anyone considering implementing an online mortgage platform into their operations will invariably ask — why not just go for the plug-and-play option? Certainly making something from scratch will cost more — and so it might. However, in the long run, the picture looks a bit different. Custom mortgage software development has several perks that set it apart from the oven-baked solution.

  • The big picture. Your very own app lets you assume a broader approach to the homebuying journey. The software can cover everything, from start to finish, or focus on solving very specific problems.
  • Maintenance and upgrades. Not only are they cheaper but their implementation is also more efficient. You have full control of any changes.

The benefits of custom mortgage software development

Now let’s talk about actual operations and functionality. These are some of the ways in which custom mortgage software development empowers the sector and makes it ready for further growth:

  • Improved data management. Greater visibility equals the ability to make informed decisions and optimize strategies.
  • Process facilitation. You can streamline loan origination, underwriting, servicing, and many other parts of the workflow.
  • Scalability. Custom-made apps make it easy to add new features and functionality as needed — and welcome a sudden influx of new clients.
  • Up-to-date legal compliance. It makes it easier to meet existing requirements and adapt to new ones.
  • Competitive advantage. Differentiate your offer from that of your rivals and showcase the unique capabilities of your banking business.

Stuff to consider before embarking on this journey

Let’s assume you’ve decided to do it your way. A wise choice. However, this doesn’t mean that your entire team should just rush into it head-on. We first need to address some basic necessities:

  • Perform market research. Get to know your target audience, your end users’ needs, and their pain points. It’ll help you craft a better product and develop a customer-centric strategy.
  • Assemble an app development team. Make sure everyone’s on the same page. Take the time to define the project scope, workflow, and necessary features.
  • Consider the user experience. The better it is, the easier it will be to build brand loyalty.
  • Pick a monetization model. This can include commission on the loan price, charging lender fees, selling loans to end investors, etc.
  • Focus on regulatory compliance. In short, make sure it’s legal. Stick to local and global laws for optimal customer and investor protection.

Must-have features

When building software, your goal is to deliver an exceptional user experience and follow all the relevant regulations. In order to achieve all that, you’ll need to incorporate certain essential features:

  • straightforward registration process.
  • well-structured user profile system.
  • intuitive search functionality and detailed filtering.
  • property evaluation tools.
  • mortgage calculator and credit rating service.
  • loan application form.
  • status tracker.
  • customer support modules.
  • document management and e-signature tools.
  • robust security features (two-factor authentication, data encryption, KYC identification system).

Types of software you can build

You can take the above list as a foundation upon which to base your custom mortgage software development. This blueprint can then include a plethora of unique features, taking it in any direction you desire.

For example, major lenders will always have custom loan organization software and mortgage management apps as a part of their offer. These normally cover everything from risk assessment to decision support. Mortgage modification modules that cover payoff, forbearance plans, deed-in-lieu and others are the best solution for the post-approval period.

When it comes to major investors, you can always focus on REO asset management services. They offer modules for investment, sales management, and reverse mortgage, among others. This is further enhanced by cloud-based lending apps incorporating machine learning (ML) and artificial intelligence (AI) algorithms.

The development process

Careful planning and execution of custom mortgage software development includes not only the process itself but also the planning and evaluation. It will almost invariably follow this pattern:

  1. Identify the goals and objectives of your app.
  2. Perform market research, including unmet needs, your target audience, and your competitors.
  3. Focus on legal compliance even before your team begins actual work.
  4. Create a prototype of a user interface that is easy to navigate.
  5. The actual development. Code and beyond.
  6. Thorough testing of the unit, its integration, and acceptance.
  7. Deployment onto a server, making sure all elements are scalable, reliable, and secure.
  8. Support and maintenance, as well as regular updates.
  9. Project evaluation through KPIs (key performance indicators) and user feedback.
  10. Stick to continuous improvement.

So how much will this cost?

There’s no definite answer to this question. Instead, it’s best to observe custom mortgage software development as the process of a couturier crafting a tailor-made suit. The level of skill and time invested will be the determining factor.

If you’ve decided to outsource the project or hire a dedicated team, you should consider several variables. These include establishing clear goals, evaluating available resources, creating design mockups, and building an MVP (minimum viable product). This will help you and your future team estimate the costs.

Think of it as empowering the borrower

The process of taking out a mortgage can be complex and stressful. Now, there’s a way to streamline and improve the overall experience through custom mortgage software development.

This stuff isn’t just about empowering the sector. The emphasis is on easy and responsible lending that will protect everyone involved. Its main goal is to better cater to the customer, be they a first-time buyer or a major investor.

The way to achieve this is through end-to-end digitalization of the entire process, transforming it into a single integrated thread. The more tailor-made your offer is, the easier it will be to reap the benefits of maximized sales, greater user satisfaction, and improved legal compliance.

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