There is no getting away from technology. It has impacted the lives of homeowners in almost every way imaginable. It’s no wonder, then, that artificial intelligence (AI) may play a part in the home-buying tools—even when it comes to securing a mortgage.
Knowing a little bit about AI and its possible impact on the mortgage industry might help you plan for your next move or give you a one-up in your first-time buying experience.
How Does AI Really Work?
Alexa, explain AI!
We all know about Alexa, right? Essentially, AI is the creation of machines that work and react in human ways. These machines, such as Alexa, are born of computer science and are designed for recognizing speech commands.
When it comes to AI and the lending industry, it has the capability of looking at thousands of applications using a specified set of rules, providing lenders and buyers with a quick loan turnaround. AI can also segment applications into groups: those applicants with significant default risks and those who are likely to be profitable. This is what is known as supervised AI. There are no rules created by humans in unsupervised AI. In this realm, massive pieces of data are fed to AI, which then uses millions of variables to present findings to lenders.
AI in the Lending Process
Sifting through all the paperwork is a time-consuming process. Having AI in the mix can give lending professionals the time to devote to those applications given the green light by AI processes. In other words, these pros will be able to use their experience to weigh in on individual applicants. As it stands right now, most buyers have to wait about three weeks to get a mortgage loan approval. Within a few years, experts say AI could have that whittled down to a mere day.
AI gives lenders a better snapshot of applicants as people. It also opens the doors for people who don’t have years of credit history. AI has a more encompassing way of ascertaining those applicants who are good bets for making their mortgage payments, but who might not qualify using other deciphering methods. Today, lenders pretty much rely on credit scores to make decisions. Using that sole determination may not be the best way forward.
One-Stop Access Point
AI will allow homebuyers to get everything they need—legal advice, financing, inspectors and contractors, etc.—from their agents rather than through research or referrals. When back-end mortgage processing is driven by AI, the gaps between lenders, agents, inspectors and others in the home-buying industry is expected to become nearly non-existent.