Applying for a commercial loan and commencing with its underwriting process can be tedious, especially when underwriting is done manually. The transaction between a borrower and a lender can only take place when the underwriter verifies the necessary documents of the borrower. The validation and verification of loan documents require a lot of time and effort from an underwriter. Considering this and associated factors, the lending companies are streamlining the traditional underwriting processes using automated loan underwriting systems. However, it depends on the services offered by lending companies which determines how much they can benefit from underwriting automation.
Let us dive deeper and understand the manual and automated underwriting.
What is the manual underwriting process?
Manual underwriting is a traditional underwriting process coined back many centuries by insurance brokers. The process is proved to be a backbone of investing, insurance, and lending. As the name suggests, manual underwriting is done manually by a certified underwriter. They look into the necessary documentation and copy the required information for further analysis. While copying the essential information, it is likely the data can be mistakenly altered due to human-made errors, hampering the complete loan application process. Considering the numerous cons of manual underwriting, lending companies are increasingly switching to automated risk management software.
What is automated loan underwriting?
Automated loan underwriting is the process of carrying out loan underwriting processes using intelligent tools and software. The loan underwriting software uses advanced artificial intelligence (AI) technology, allowing the system to make wise and calculated decisions. The decision-making processes of the underwriting software determine whether your loan application will be accepted or rejected after analyzing your credit report.
The underwriting software is equipped with AI technology and machine learning(ML) algorithms that gather client’s information and analyze it further. The software helps lending companies to generate greater revenues by cutting costs associated with manual underwriting. The transparent processes of underwriting software allow the companies to enhance their customer experience by accelerating the loan application processes. The best commercial lending software has proved to be highly efficient while calculating potential risks and any red flags associated with a loan application.
How is automated underwriting better than manual underwriting?
The automated underwriting software has been a boon in the lending industry, allowing the companies to simplify their tasks and generate greater revenues. On the other hand, manual underwriting processes take a lot of time and are prone to delays in each step.
The software allows your clients to submit their documents and other details online without having to collect them manually by an underwriter. Uploading the documents online eliminates document theft or losing the hard copies.
Various reputable lending firms have utilized automated underwriting for a couple of years and have made huge profits since then. With a lot of experience working with the software, lending companies claim that automated underwriting can bring speed and accuracy to commercial real estate financing. Indulge your business in automated lending software to minimize the chances of errors and maximize profits.