eClosing: How It Works and Its Upside

Ever since the pandemic, most industries have embraced digitization in most of their processes. Besides making life easier, employing technology is vital for any business to remain relevant since we live in an increasingly digital world. The number of consumers ordering goods online has grown rapidly over the past two years, so much so that many businesses are directing their efforts and resources toward ramping up their digital offerings. Beyond making online purchases, consumers can now finalize a mortgage online – mortgage eClosing.

When most people hear of mortgage eClosing, they picture relaxing at home on the couch while watching their favorite show and at the same time buying a home. However, eClosings still require a few in-person meetings, but the process is way faster than traditional mortgage closings. Although you may still have to do a bit of pen and paperwork to finalize things, the greater chunk of the process doesn’t require your presence.

What is eClosing?

An eClosing is basically where one or mortgage closings happen electronically. They essentially came out during the pandemic when it was less safe to finalize mortgages in person. But given the benefits of eClosings, borrowers can now expect this option to exist even in the coming years.

How does eClosing work?

The main difference between eClosings and traditional closings is in the signing of the documents. Traditionally, to close a mortgage, you’d have to leave a wet ink signature on each necessary record. Also, the signatory process had to be done in a room with a representative from your lending institution. However, with eClosing, all the processes are done digitally; you only need to leave an electronic signature. eSignatures, commonly known as electronic signatures, are signatures that you can use on digital copies on a computer or tablet.

An electronic signature can be as simple as a snapshot of a handwritten signature or an image scan. Other times electronic signatures can be complex; for example, a digital signature certificate is generated via PIK. The signatory process can be done in person or remotely, but you need to confirm your identity. You may need to produce your government-issued ID or your driver’s license.

Advantages of eClosings

The main upside of going the eClosing route is a faster process. Usually, it takes about 30 days to originate a traditional mortgage, from initiating the application until the loan is closed. But eClosings shorten that window because they are easier to coordinate and less likely to result in errors. The best digital lending platforms encourage lenders to speed up this process by creating a more effortless experience for borrowers. Using data and AI to eliminate manual steps from the fulfillment process also results in a shorter turnaround time. 

When using eClosings, borrowers don’t have to wait for a lengthy period to close their home loans. Lenders also benefit from eClosings since the process is cost-effective and time-efficient. More and more borrowers are demanding digital options regarding their mortgages. Today, digital operations are no longer a nice but an expectation.

An eClosing is also convenient since you can close from any location. Traditional closings require you to be in the presence of a representative from your lending institution. That means you may need to take a day off work, schedule the meeting and avail yourself. But eClosings use electronic signatures, meaning you can close even if your lender is in a different country. If wet ink is required, you may utilize a mobile notary. Also, with eClosings, you can review the documents in advance and ask questions of the appropriate parties.

As previously mentioned, most processes of eClosing take place online, meaning there is less paperwork. There is also a reduced carbon footprint in transporting and storing physical documents.

eClosings also offers a new and better experience for borrowers. There is streamlined closing and automated data validation, and you can close on your real estate transaction interactively through a virtual room.

Another advantage of eClosings is that the process is secure thanks to multi-factor and knowledge-based authentication. eClosings also allow you to identify any altered documents quickly.

You may consider going the eClosing route if you have health-related concerns related to the pandemic or want to eliminate the inconvenience of a traditional closing. Closing your mortgage digitally could get you into your new home a few days faster.