Digital is king, except when it comes to real estate closing
Mortgage lending is one of the few industries where most people still want a face-to-face interaction.
Digital tools can be great for shopping around or managing your home loan.
So, if given the option to close on a house remotely, should you? Many experts say no.
With the right lender, closing on a house in-person can be a much better process than an all-digital mortgage loan.
Look for digital convenience, but a personal touch at closing
Solidifi, a real estate appraisal company, recently polled home buyers about their mortgage loan preferences.
Overall, there were mixed feelings about digital versus in-person lending:
- 81% favor closing in-person. This supports the value of having a professional and qualified closing agent at the table
- But seven in 10 prefer a more digital process at the closing table. Nearly a quarter suffered delays during the closing process; half of these delays were caused by problems with the paperwork or the filing
In addition, 47% said they felt anxious about the closing process.
That explains why the qualities rated most important for closing agents were “knowledgeable” (chosen by 50% of respondents) and “efficient” (40%).
One of the best things you can do to ease closing fears is shop carefully for a lender. Find someone you trust and are comfortable working with, and the whole loan and closing process will be that much easier
Why work with an expert when closing on a house?
Loren Cooke is president of Solidifi. He says there are several valuable takeaways from this report.
“Consumers want a knowledgeable professional there at closing. That’s because this person can address any concerns and answer questions. And they can ensure all important details required for the closing on a house are being handled appropriately,” says Cooke.
“It’s all about the customer experience. The right professional will guide customers through the process. And they will offer assistance with any questions.”
“This makes the process less stressful. So does ensuring that all loan documents are signed correctly,” adds Cooke. “After all, a real estate transaction is a complex process. And almost half of our respondents indicated they felt anxious or nervous.”
Closing in-person helps ensure that all loan documents are signed correctly, and can avoid delays that come from unsigned or missing documents.
Lindsay Smith, chief strategy officer for Title Alliance, Ltd., says there’s another message here.
“Buyers want a digitalized process, through electronic mediums. But they don’t want a digitalized closing. These are two very distinct items that most people confuse,” says Smith.
Put another way, people don’t enjoy having to pore through and sign a huge paper stack of loan documents. That’s no surprise.
They’d like to expedite or streamline matters. Digital tools and more efficient technology can help. But most still want one or more experts present. That means an attorney, loan officer, and/or title professional.
Having an expert there can help you make better decisions
“On one recent occasion, one of our notaries was assigned to a closing,” Cooke recalls. “The homeowner was undecided. And his loan officer couldn’t convince him that he was making the right decision.”
The closing agent listened to them discuss the issues. The homeowner and loan officer weren’t making any headway.
“That’s when the closing agent stepped in. This person shared a personal experience with another scenario. The agent explained the numbers and situation in more detail to the customer. After thinking about it a bit more, the customer signed the paperwork. And the closing went through,” says Cooke.
When you can choose your own location for document signing
Generally, closing takes place at the office of your lender, title company, attorney, or escrow company. One or more experts will be present at closing and provide answers to anything you don’t understand.
But the truth is, closing on a house doesn’t have to take place at one of the offices mentioned.
Depending on your state’s laws, the real estate closing can occur at a location convenient to you.
Depending on state laws, you may be able to choose a location for real estate closing that’s convenient for you.
Also, when you’re buying a home for cash without a loan, you can pick the closing spot.
In this case, an attorney or mobile notary meets with you at your desired location to present the loan documents and disbursement services. This is called a “witness only” closing.
“I scheduled my mortgage refinance with a mobile notary. This person came to our house in the evening. That way, neither my husband nor I had to take time off work. And we didn’t have to find childcare to attend an in-person closing.”
Why an in-person real estate closing is still better
But many experts don’t recommend a witness-only or remote closing.
“Professionals on hand can answer questions, especially in title offices operated by attorneys. This can be a huge source of relief. In addition, it can remove some of the anxiety associated with buying or selling your home.”
Remember: A home purchase will likely be the single largest transaction in your life, Westfield notes.
“So having a professional at the ready and in-person in a brick-and-mortar office can be very assuring,” says Westfield.
With a remote closing, answers to the questions you ask may have to wait.
Smith notes some of the common questions that might pop us at closing, like:
- Why are we paying these taxes now?
- Where did this credit come from?
- How do I know if my HOA dues are current?
Without an agent on the scene, “answers to these queries can get delayed,” Smith cautions. That’s because they may need to go back to the person who prepared the loan documents.”
Also, looking over your paperwork with a pro before signing lets you inquire about any red flags you spot.
With a remote signing, you can actually miss out on a more memorable experience, too.
“Real estate transactions are wrapped in emotions. These emotions, as well as the support and memories, are not captured in the same capacity when the closing is remote or digital,” adds Smith.
“The atmosphere for a closing invokes a sense of celebration. It’s not uncommon to receive balloons, flowers, confetti, fresh cookies, or a celebratory toast once closing is completed at an office.”
What’s in the future for real estate closing?
Smith believes that closing should always require an in-person and personal interaction.
“In addition to the complexities of the transaction, the human experience and emotional reaction alone deserve a face-to-face experience,” she says.
Increasingly improved technology and electronic signing options can help, though.
“Using an iPad or thumbprint to sign would help modernize and digitalize the actual document signing. I’m certain these advancements are coming in the future,” says Smith.
Cooke notes that people have been talking about complete digital closings for years.
“Yet the industry hasn’t moved there yet. Based on our research, we agree that people want a more digital experience,” says Cooke.
“But comfort and convenience for consumers don’t always equate to complete automation. People still want a human connection to walk them through a mortgage signing.”
Ease your worries about closing on a house
A better closing process starts with having the right lender at your side.
That means you should not only compare rates and fees when shopping for a mortgage, but also customer service.
Take note of the tools available and quality of communication when you’re requesting quotes.
We recommend comparing at least three lenders to find the right one for you.