The loan process starts with an application.
The borrower submits an application requesting a specific loan amount and provides proof of their employment and finances. A mortgage team facilitates the rest of the process.
Application data like income and debt must be verified. Credit history must get pulled. Once all the necessary information is gathered, the loan moves into the underwriting stage before the team makes an ultimate decision.
A loan origination system (LOS) is a core component in this process that can manage these steps. The software automates and streamlines tasks like credit scoring and document verification, making the loan process faster and more efficient for every party involved. A strong LOS is a vital part of a modern lending operation.
What is an LOS?
An LOS is a platform designed to help lenders manage the mortgage process from application to closing. From data entry and analysis to underwriting and final approval, an LOS significantly cuts down on manual labor.
An LOS streamlines the various tasks that would have to be done manually if a company did not have software capable of organizing all the information and data required to close a loan.
Software with functionality that includes automated origination, underwriting, fulfillment, thorough tracking, and document management can all contribute to a better experience for the lender.
In today’s lending market, relying only on manual labor is going to be too expensive. With a smart LOS doing the heavy lifting for you, it will help your team remain competitive, accurate, and efficient.
Explore what the Sonar's LOS software can do for your business.
Benefits of using loan origination systems for mortgage originators & lenders
The benefits of using an LOS are numerous.
Improved efficiency will help you increase productivity. Time-consuming, tedious tasks can be handled by technology, freeing your team to focus on more complex matters. You’ll also be able to get more loan applications to closing when the time for underwriting drastically reduces, which means an improvement in profitability and customer experience.
An LOS also helps reduce risk with comprehensive loan tracking and auditing. Errors are rare and can be detected early on. Since the system is constantly updating, assured compliance provides access to lenders showing the latest changes in regulations and standards.
These advantages also improve the customer experience. Everything happens much faster, and lenders have more time to communicate with borrowers if there are questions.
Smoothing out the fulfillment process
A functional LOS automates the loan fulfillment process, so it’s reliable and close to error-free. When everything gets accomplished by hand, mistakes are inevitable. To make matters worse, the errors can lie hidden or get missed by human accuracy checks.
Most LOS systems don’t give you the ability to see loan pricing in real time while a loan is actually being created. At Sonar, we make pricing seamless in both the LOS and POS, so ithe customer has a way to see their loan options in real time, as well as the Loan Officer. With pricing being the most important aspect of the loan process, leaving it to manual entry or antiquated technology is ripe for disaster, or, at best, inefficiency. When lending software works seamlessly between both the lender and borrower, key data such as credit scores and loan terms can all lead to an algorithmic output that accurately communicates the pricing options for the loan.
The LOS integration capabilities give you access to multiple systems that are vital to accessing data from third party sources seamlessly. Quickly pull data from third-party sources without switching applications numerous times.
Having all the information you need in one space is extremely helpful with collaboration and efficiency in your underwriting process. You won't have to hunt for customer files across several platforms when the underwriter asks for a specific document. Operating out of a single platform with multiple capabilities can also save you thousands of dollars in the long run.
Ideally, you won’t need multiple systems and could let your LOS handle all of your software needs. However, this currently isn’t plausible for some businesses. You may have essential legacy systems.
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Key components of an LOS
An LOS should have several key components to ensure its functionality and effectiveness. The correct LOS for your business should have the following qualities:
The ability to customize your workflow
Your business, and your risk preference, are unique. An LOS is only valid if it can be customized to suit the needs of your business operations.
Document storage and management
Your LOS should save you countless hours of data entry and filing. It should safely store all documents and ensure they’re available when needed.
Your LOS should have compliance monitoring features to keep you in line with the latest lending regulations.
What to consider in a LOS
Today, any new LOS software is going to be a cloud-based technology. The way we see it, originators have two options:
- Stick with the status quo - clunky, antiquated software (aka legacy providers)
- Upgrade to modern technology similar to most technology we use today
In our opinion, most companies will eventually get to the point where they switch from using legacy software. That begs the question – what should I look for in an LOS?
A company like Sonar offers an integrated LOS and POS that make it easier for both the originator and the borrower. As we sit in Q1 2023, and the market in the state that it’s in, there is never a better time to make this comprehensive switch. We understand the short-term obstacles a company faces in a wholesale structural change to their business, so Sonar offers customer support and onboarding services to make the transition as seamless as possible.
The long-term benefit speak for themselves:
- Your team will enjoy working within one seamless system,
- You will reduce the number of technology providers as well as the expenses,
- You will allow your team to do what they do best – close loans and create the best possible customer experience.
Simply put, the right technology can help you build a winning business, that’s set up to scale as the market rebounds.
Sonar gives lending companies access to multiple integrations and fast loan decisions. Leveraging our mortgage origination technology can help you eliminate lending inefficiencies and reach more customers.
Ready to revolutionize your mortgage businesses with an integrated loan origination system? Request a demo to step into the future of origination success.