Last month we hosted the “Complete Guide to Home Equity Products” webinar with HousingWire. The conversation was led by HousingWire’s COO Diego Sanchez who was joined by our Chief Revenue Officer Craig Austin, HousingWire’s Lead Analyst Logan Mohtashami and Space Coast Credit Union’s AVP of Consumer Processing, Virginia Wilson.Here are the top takeaways from the webinar:
- Inventory is at an all-time low, but Americans are in a pretty good financial position
The housing market is currently at a “savagely unhealthy” level meaning there are just too many people chasing far too few homes. Inventory has been falling for over a decade, people are staying in their homes longer and are in a much better place financially than they have been historically. “Homeowners in America are doing great because they have a simple 30-year fixed product, which means they have a fixed long-term debt cost, and every year their wages rise. The best hedge on the planet against inflation is an American 30-year mortgage, because your long-term debt costs are still the same, but your wages rise higher and faster because of inflation,” said Mohtashami.
- Home equity is hot 🔥
American homeowners currently have more tappable equity than ever before – a net $30 trillion, according to Mohtashami. So, what does that mean for home equity lending? GROWTH. “We’re definitely seeing more customers come to the table and ask questions, such as, ‘What is a home equity loan? What do my payments look like?’” said Craig Austin. “It’s an exciting time for home equity, for sure.”
Commenting on her credit union’s experience, Virginia Wilson said, “We traditionally had our home equity products alongside our first mortgages, and for us, home equity became an afterthought. All our effort and focus was first mortgage-focused, so we had to move home equity out from under our first mortgage umbrella and treat it as a separate entity all together. One of the first things we did was decrease our HELOC closing package from 68 documents to 15.”
- The home equity lending process does not have to be antiquated
A common misconception by lenders either entering the space or putting more effort into their home equity lending activities is that it is an antiquated lending process that’s not nearly as digital as first mortgage. Lenders coming into the space want to balance this borrower experience with the same level of digitization that they offer borrowers in their first mortgage. They want a digital process that will assist with margins, since the home equity space is traditionally a tight margin space, and that will streamline the process from application through closing.
FirstClose Equity allows lenders to offer their borrowers a streamlined process that cuts down the origination and closing process to as few as10 days (depending on HEL or HELOC) vs the industry standard of 45-60 days. Borrowers can get feedback on their home valuation, available equity, get prequalified, submit for a loan and receive conditional approval all in a matter of minutes – all from a white-labeled borrower-facing platform. The order management module is currently used by more than 200 lenders nationwide to order the required settlement services, taking cost and friction out of the process. And most importantly, FirstClose writes all information directly into the LOS without the need for manual entries, further streamlining operations and the borrower experience.
“With partners like FirstClose, we’ve added and changed things to make our process much smoother,” commented Wilson. “Going from 45- to 60-day closings to an average of under 20 days – that’s a huge difference,” she added.
By better understanding the product and making necessary changes to the process, Space Coast Credit Union’s home equity business has gone from an afterthought to the top credit union in the home equity space in the state of Florida.
To learn more about home equity opportunities and how the right technology partner can help streamline and optimize the home equity lending process, download the full webinar here.