Global fintech and funding innovation ecosystem

3 Ways Fintech Is Changing Homebuying

Guest Post | Aug 9, 2021

Growth in real estate and fintech - 3 Ways Fintech Is Changing Homebuying

Various technological changes had an impact to improve our home building or owning process, for example, metal roofing from londonecometal which provides green and sustainable roofing. From the other technological changes that made housing and the real estate sector easy, Financial Technology is on the top list.  A significant change has taken place in the finance sector that brought lots of innovation and made it simple and easy to access by the consumers. Financial Technology (Fintech) is relatively a new term that seeks to improve and automate the delivery and use of financial services. It helps companies, financial organizations, and better manage their financial activities through computerized software and mobile applications.

Since the inception of this revolution, Fintech has brought a lot of customer-oriented solutions that include education, retail banking, fundraising, non-profit, real estate, and so on. Fintech has changed the way real estate businesses finance, innovate, build, buy, and sell homes. Innovation took place in the mortgage ecosystem, bringing significant efficiency that benefited the customers although a huge gap exists and there is room for improvement in this sector. The Housebuying process of the real estate business includes five phases namely Pre-buying, Buying and Selling, Mortgage Searching, Mortgage Lending, and Post-purchase. In every phase, Fintech has brought innovation to make the process more efficient for all the stakeholders involved in the process.

Find below 3 significant impacts of Fintech on homebuying -

1.  Enhancing Efficiency

It might not be unknown to you that the real estate industry is vast and severely complex which lends itself to frustration very often and there is huge scope to improve the sector especially through the use of technology and the process has already been started. When someone steps down to buy a home for the first time, it comes with a lot of challenges. A survey of homes.com found that almost one-third of the home buyers from 2000 respondents felt nervous when their home buying process took longer than expected and 30 percent of them conceded that they have broken down in tears at some points of this process.

See:  Fintech Real Estate Directory on FintechCanada.io

The sector itself was in need of simplification that drove the effort of business leaders in 2019 to accommodate the expectation of modern homebuyers through some stand-out improvements. Those efforts not only met the buyers’ expectations but made the process much more efficient for all the stakeholders including agents, brokerages, mortgage lenders, and homeowner insurance providers. IBuying is one of the solutions that are now a hot topic in the real estate industry although its market share is still little in terms of the total number of transactions but if the transaction occurs in a place where iBuying works in full swing, you will find it definitely a simpler option.

2.  Making it Easy to Buy Mortgage

Fintech has had a good amount of influence on real estate financing and also for lenders who lend mortgages. The USA itself has seen numbers increase dramatically in terms of the market share for mortgage lenders in the past half a decade. Many loan lending platforms have seen their shares increase a lot since they went fully online. Online mortgage lenders are able to provide their services and facilities to the general audience faster, more efficiently, and accurately while also being able to charge less in comparison with other lenders. Fintech has been said to be way faster compared to traditional mortgage lenders, saving people a lot of time for loan processing as well as refinancing.

Fintech providers are also able to provide interest rates that are less than traditional mortgage lenders mainly because the operational cost is very less. Other than that more and more financial organizations and institutions have decided to accept fintech more these days which has resulted in more people using it mainly due to its reliability and popularity. With an advance in technology with each passing day, fintech providers are getting smarter and better at providing more to their customers with a click of a button.

3.  Addressing the Structural Barrier

The impact of Fintech is not equal in all the phases of the home buying process, so far little progress has been made toward eliminating the structural barrier of this sector for example expanding housing affordability and improving access to credit. It might be because most of the Fintech start-ups are still not mature enough to lead the sector. We believe that the barriers will be eased when these start-ups will turn into mature companies. Initially, some start-ups are trying to make it easier for the less wealthy customers to build credit which can possibly facilitate their qualification for a mortgage. This is really a trend consumers can hope for the best from, but we have yet to get any major innovation that can let more and more people qualify for mortgages.

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Mortgage service causes huge costs because of its high-touch, labor-intensive nature which is difficult to automate using technology but recently we are observing new Fintech entrants who are trying to change this hopefully in near future.

It goes without saying that Fintech has brought huge efficiency in home buying process but very little progress took place to ease the structural barriers to homeownership. To expand the benefits of fintech, it’s a must to identify the impediments and resolve them with next-level innovation in this sector.

 


NCFA Jan 2018 resize - 3 Ways Fintech Is Changing Homebuying The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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