The Complete Guide to Loan Origination Systems: A Must-Have for Lenders

If you are looking to increase the efficiency of your loan officers or streamline and organize your workflow, loan management software is key. Today’s mortgage software has increased the productivity of loan officers and has helped keep loan origination expenses manageable for clients. Investing in a loan origination system can save you money in the long run, and can increase your client base by automating tasks and freeing up more of YOUR time.

What Is Loan Management Software?

Loan management software is a technology that allows private lenders to automate the entire loan lifecycle of a loan from origin to credit decisions, payment processing, collections, and from accounting to reporting. These tools provide support for consumer, business, home equity, and mortgage loans. A loan origination system is designed to do the following:

  • Manage loan origination and fulfillmentmortgage software generally includes point-of-sale functionality, process management, status/milestone management, origination workflow, and document management. Most platforms also allow you to customize the application to suit your needs. This allows you to manage your pipeline as you work with borrowers, internal staff members, realtors, and third-party service providers.
  • Manage pricing and eligibility for each loan – this feature allows users to quickly determine if the client is eligible for a loan. Most loan origination systems will integrate with external product and pricing engines if they do not have one built in.
  • Manage the required documents for underwriting and closing – when you are looking at loan management software, make sure it includes a document management component. With a document management system, you will be able to secure documents in the cloud, per industry security practices.
  • Interface with third-party systems for data/document exchange – to get the most out of your mortgage software, make sure your LOS can connect to the programs your third-party vendors use via API. API is software that allows your loan origination system to communicate and exchange data or documents with other systems.
  • Communicate with compliance vendors to ensure compliance – because the loan industry is so heavily regulated, ensuring compliance during every step of the loan process is critical. A LOS should have the ability to share data with compliance vendors and help you stay on top of regulations during all transactions.

One Size Does Not Fit All – What To Look For In A LOS

A loan origination system is not a one-size-fits-all system. Each business has specific needs, so it is best to take note of your internal systems and needs before purchasing a loan management system. Before you purchase any software, make sure the LOS has the features listed above: loan origination and POS capabilities, CRM functionality, document management, pricing and eligibility, an e-signature platform, compliance features, and API for data exchange. Two other key features that you need to consider when selecting a LOS include:

  • Cloud delivery – ensure secure access to sensitive data for approved users only, and you’re your client’s personal information from being stored on non-secured hard drives.
  • Professional installation – setting up a loan origination system takes time and experience. Make sure the vendor you select offers professional installation and will be available to answer questions after the fact.

Before you begin researching mortgage software, make a list of key features that you need. Investing in a LOS can be expensive, so you want to ensure that the loan management software you ultimately purchase is compatible with your needs and can be customized to fit your specific business model.

Why Use Loan Management Software?

For a long time, lenders have handled every aspect of the lending process using their in-house processes and tools. This made the business of lending time-consuming and complicated and allowed for mistakes to happen. Using a loan origination system can help you manage the loan process more efficiently. Some of the other benefits of this software include:

  • Growing your revenue – automate the payment collection and tracking process with loan management software. This tool can facilitate online payments, follow-ups, and offline payment collections, resulting in increased revenue for your business.
  • Reducing turnaround time – automating loan servicing tasks can significantly reduce the turnaround time of the lending process, including generating and sending notifications, sending notifications to borrowers in default, and calculating fees and penalties.
  • Ensuring accuracy – calculating the accuracy of repayment, principal, and interest rates is extremely important to private lenders. A LOS ensures process accuracy and handles complex calculations with ease.

With the advent of loan origination systems and loan management software, the lending industry has entered a new era. Take advantage of the benefits a LOS can offer to your business and get ready to move your processes to the next level. In today’s business climate, mortgage software solutions are a must-have for lenders of all sizes.

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