Homeowners have earned $60,200 in net worth on average this year – Blend’s new digitized home equity loan software will make access easier than ever – Figure Acquisition Corp (NYSE:FACA), Blend Labs (NYSE:BLND )
U.S. home equity hit record highs this year, topping $29 trillion in the second quarter, according to the Federal Reserve.
This represents a gain of nearly 28% in equity year over year, with the average owner earning around $60,200 in equity. But skyrocketing inflation and a clumsy, outdated loan process have made using that equity difficult for many homeowners.
These opposing forces are creating increased demand for financial products – especially home equity lines of credit (HELOCs) – that allow homeowners benefiting from near-unprecedented equity gains to tap into this newfound equity while banks struggle. with an outdated, largely paper-based application process. to approve new HELOC and home equity loan applications.
This is why companies like Blend Labs Inc. BLND are working to digitize home equity lending space. The cloud-based software platform transforms a slow process of over 30 steps from application to funding into a fast process that can be completed in about three steps.
HELOC demand is growing, but banks still rely on outdated paper apps
HELOC volume jumped almost 50% in the first half, as the revolving line of credit with variable rates and, generally, no origination fees is more attractive than a cash refinance for borrowers who have locked in historically low rates on their original mortgage over the past last years years.
Homeowners are looking to take advantage of this surge in home equity to consolidate high-interest debt into low-interest home equity lines of credit, make home renovations that could further increase the equity in their home or use them as a down payment on a second property to build a real estate portfolio.
This increase in HELOC volume is likely also due to the introduction of digital or technological solutions in the mortgage space that make it easier for customers to research financial products, compare rates and offers, and complete the application process.
Traditionally, home loans have been slow to modernize, relying on a paper-based process with an average of 30 or more steps from application to funding that can take over 45 days to close. This is largely due to the cumbersome manual process on the bank’s side which leaves the customer waiting while a banker reviews the application, verifies assets and income, withdraws credit, requests documents, etc.
To meet the growing demand, banks, with the help of fintechs, are finally seizing this opportunity to update and digitize this process so that owners can tap into their capital faster and easier. Figure Technologies Inc. FACA, for example, uses blockchain technology to record and exchange loan data, automating much of the manual process that was required. Meanwhile, Button Finance uses artificial intelligence to speed up the decision-making and funding process for home loans.
Blend Instant Home Equity brings much-needed digitalization to home equity lending
Combine your Instant Home Equity is the latest in a company committed to bringing digitalization and technology solutions to the real estate and mortgage industries. The new product integrates some of Blend’s existing software, like its Blend income verification and remote online notarization platform, to create a faster, more cost-effective alternative to home lending.
The end-to-end automated product integrates identity and income verification, property valuation, title, adjudication and notarization to reduce the time and cost associated with processing a loan application on home equity. For bankers, this makes it possible to generate a personalized offer for owners, approve it instantly, and close it in days rather than weeks. For consumers, this means they can now easily access their home equity for things like debt consolidation and more.
Unlike other fintechs in the home equity lending space, Blend uses a modular architecture that makes it easy to develop new banking products that all fit into a single platform. This allows banks to digitize more of their services without relying on multiple software that may not integrate with each other. Banks incorporating the new Blend Instant Home Equity product can easily add its mortgage and other lending software. This ecosystem approach also seems to work, as Blend reports that 71% of its current customer base uses two or more Blend products.
As competition in home loans intensifies, banks are going to need scanning tools like these to handle greater volumes of applications while avoiding long wait times that could drive customers to competing lenders.
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