eClosings: The Advantages of Bringing Your Closings Online
Electronic Mortgage Closings (eClosings) can provide significant benefits for borrowers, loan officers, real estate agents, and settlement agents alike. As the housing market and refi volume stabilize, eClosings may help lenders stay competitive in market conditions that have historically produced narrow profit margins.
eClosings have typically been seen as the alternative to traditional closings in specific situations. For example, a borrower has vacation plans and is unable to make the closing date in person, so they have to find a more flexible option that accommodates their schedule.
In this scenario, an eClosing may be the deal-breaker. But what if a lender could promote this as their competitive advantage?
“Remote Online Notarization is currently thought of as an exception,” said Shane Westra, Chief Product Officer at SimpleNexus, “when in reality, it should be the norm as a competitive advantage.”
There are many benefits to eClosing, some of which include:
- Address shrinking profit margins by reducing their operational costs, and support a higher transaction volume as they expand their online footprint. Instead of competing with the rate itself, lenders are able to compete with other big lenders.
- A more productive, coordinated signing experience, as lenders can coordinate with title agents prior to closing day to ensure all documents are accurate and ready to go for the signer.
- Flexibility for signers to view or sign the documents ahead of time. When homebuyers go in to sign their documents at a traditional, in-person closing, they have not yet seen their documents, which may lead to feelings of anxiety on signing day, especially if there are discrepancies in the contract.
- An end-to-end signing experience for the homebuyer, when the lender, title agent, real estate agent, and the signer all meet in one space, a more professional communication experience is established in case errors are detected or signer questions need clarification. This leaves more time to celebrate with the buyer, instead of rushing to make day-of-closing amendments.
How do eClosings work?
During a fully digital closing, every document is electronic and uploaded to one single platform. A signer receives the closing package from their title company or lender, and is able to sign and notarize the closing package fully online. Following the signing, the title agent and lender receive the completed closing documents.
On the Notarize platform, signers have the choice to complete either an online closing or hybrid closing — the main difference being that the closing and notarization ultimately still happens in paper and in person.
Can realtors help out with eClosings?
Realtors may help to alleviate the stress of borrowers by funneling their signers from into a more seamless digital closing experience, as a high percentage of loans closed are actually referred by the real estate agent.
The key? Signing flexibility for their client and error-free closing rate resulting in everyone getting paid faster.
According to Westra: “The realtor having that communication ahead of time with the lender to set expectations of which title agents they want to work with upfront is key.”
How to successfully implement eClosings
Orchestrating a legal eClosing from end-to-end is not an easy task, as it takes policy knowledge, IT resources, and employee training to ensure success in the process. That being said, those who are able to implement this digital-first customer experience reap the benefits of (1) new business, (2) repeat business, and (3) an enhanced customer/real estate agent experience.
Learn more about how title agents and their partners can effectively integrate eClosings into their business model during Notarize and SimpleNexus’s upcoming webinar, Blueprint for eClosing: The Mortgage Experience Made Easy, on-demand.