HELOCs and Tech: How to Keep Loan Volume Up

Amid a quickly changing real-estate market and uncertain economy, many homeowners are applying for a home equity line of credit, or HELOC, to tap the value of their property. According to TransUnion, HELOC originations nationwide increased 41% in the second quarter of this year compared with Q2 2021. However, the traditional closing process is time-consuming and expensive. By using eClosings, lenders can process significantly more HELOCs in the same amount of time while providing a better customer experience.

HELOC closing without leaving your home or office 

Previously, everyone involved in the process – lender, homeowner, notary and attorney – gathered around a table in a single location to hammer out a deal. The logistics of an in-person meeting with so many people often meant scheduling weeks ahead of time. The travel time for all parties, including the lender, added to the processing time and limited the number of HELOCs that could be managed in a week.

With an eClosing, either the entire process is digitalized for a full closure or a portion of it – such as the signing of a document – is completed online. During the signing portion of an eClosing, the homeowners access all documents online and then sign electronically. Next, the signatures and documents are notarized online with a service such as that offered by www.notarize.com. This eliminates travel and saves time. Lastly, the promissory note is signed and filed electronically in the form of an eNote. 

With HELOC volumes increasing, lenders are turning to eClosings to reduce time and costs. The top benefits of eClosings include: 

• Shorter time to closing date – Because eClosings do not require the coordination of schedules and conference room availability to esnure everyone is in the same room, lenders are able to complete the closing more quickly.

• Fewer days between closing and funding – With eClosings, the funding is completed within fewer days. By using a full eClose, lenders can eliminate an average of 7.16 days from the processing/funding cycle time.

• Fewer errors – Automation of the process reduces the likelihood of human errors, such as missing signatures and missed deadlines. Lenders are able to process more HELOCs in the same time due to less rework.

• Direct cost savings – Because the transaction time for each loan is shorter, lenders and homeowners see reduced costs. With remote online notarization, lenders save $211.97 per loan and $154.52 during a hybrid eClose. Lenders who digitalize the entire process with a full eClose save $443.85 per loan.

• Shorter closing meeting – In addition to reducing the cycle time, an eClose shortens the actual closing appointment. A hybrid eClosing eliminates 99 minutes and a full eClosing cuts as much as 157 minutes from a transaction.

• Improved customer experience – Because less travel is required to attend meetings, resulting in shorter times-to-funding, and with errors reduced, homeowners find the experience is easier than a traditional closing. ‍

‍Moving forward with eClosings for HELOCs

With the increase of HELOCS, now is an ideal time to start using eClosings. Many lenders begin by adding online notarization through Notarize.com as a first step toward digitialization. After seeing the benefits of moving even a single process online, lenders often begin using a hybrid eClose process and then move to a full eClose. And because homeowners find the process less cumbersome, they are likely to share their positive experience with their friends who may also be considering HELOCs.