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HELOC – The Bright Side of our Turbulent Times

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Volatility is the Norm

It’s been a crazy two years, for many reasons. Between February 2020 and January 2022, the mortgage industry witnessed something we never thought we’d see: 30-year fixed-rate mortgages below 3.5 percent. These rates attracted a record number of refinances, with cash-out refinances reaching $1.2 trillion by 2021.

Then, in what seemed like an instant, mortgage rates skyrocketed in Q1 2022, effectively ending the refi boom. Home Buyers are getting nervous; refinances are drying up and Lenders are scrambling. As interest rates and mortgage interest rates rise, consumers are turning to home equity lines of credit (HELOCs) to access a portion of the equity they have. I mean we all still want our updated bathrooms, kitchen remodels and for the lucky few backyard pools.

Why Homeowners are Seeking HELOCs?

HELOCs offer flexibility. Consumers are showing a growing interest in home equity loans and home equity lines of credit as a means to access more affordable capital and take advantage of rising home values. For example, where I live in Carlsbad, CA, home sale prices have increased by 64% in the past two years – That is a lot of “equity.”(source Redfin). Homeowners don’t have to borrow the entire credit line with a HELOC and are only be charged interest on the amount they do borrow. Borrowing no more than you absolutely need during times of interest rate volatility can help keep their payments more manageable. A home equity line of credit, or HELOC, is one of the best options on the market right now for homeowners looking to tap into their home equity.

Lenders Need to Navigate and Embrace Change

Whether you are a lender who is seeing a flood of HELOC consumers and wish to deliver a seamless borrowing experience or a lender who is planning to add HELOC to your portfolio to seek growth in a declining refinance market and cross-sell opportunities to their existing customer base- you need to be proactive.

Enter a Delightful Lending Experience with Tavant

FinXperience – Advancing the Future of Lending Technology with AI-Powered Digitization

Tavant’s FinXperience provides personalized and configurable journeys for HELOCs and home equity installment loans through a suite of user-friendly portals and mobile companion apps. It offers:

  1. Accelerated deployment – Standard integrations with LOSs, CRMs, PP&Es, document generation, and other third-party systems enable solutions to be deployed in 6 weeks or less.
  2. Fast approval – Getting a home equity line is often cumbersome for consumers and requires lots of paperwork. However, Tavant’s FinXperience makes the process for lenders much easier, and they can offer funds in just a few days. It can just take 5-minutes to decisioning and 5-days to funding.

Touchless Lending™️– How AI-powered Touchless Lending™ Simplifies, Streamlines & Saves $$

Tavant offers a seamless loan manufacturing pipeline for HELOCs through Touchless Lending™️. Touchless Lending™️ focuses on these underutilized middle and back-office associates, allowing them to make a clear-to-close decision in as little as five days, handle five times as many mortgages at once, and save over 75 percent on processing and underwriting costs per mortgage. The Touchless Lending™️ platform judiciously utilizes AI and machine learning techniques to solve the complex problem of using a machine to do the work of a senior processor and an expert underwriter.

The Bottom Line:

HELOC has come back as people seek alternative ways to access the equity in their homes. The rest of 2022 could be a record year for HELOCs, just as 2021 was a record year for refinancing. Understanding the dynamics of the home equity market can help mortgage lenders identify homeowners in the market for home equity.

For more information on how next-gen solutions can help Fintech companies transform their businesses, visit here or mail us at [email protected].

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