Technology has changed many industries. The introduction of machine learning and artificial intelligence (AI) has made a difference in nearly all aspects of our lives, from purchasing groceries to driving, doing our jobs, and even banking.
AI tech offers the ability to perform the same task repeatedly with the same level of human intelligence and discernment. Each time AI tech performs a task, it becomes smarter through a process referred to as machine learning. AI tech is often brought to the consumer market as a SAAS (software-as-a-service), seeking to solve a problem or address a consumer or business pain point. The target market for AI tech is boundless; almost every conceivable industry can utilize AI tech in some way.
AI tech is playing a massive role in many sectors. In healthcare technology, AI tech helps diagnose, develop drugs, and improve patient health. In the transportation industry, AI tech is already scanning traffic patterns to optimize routes that GPS can recommend. The financial services industry uses AI for chatbots and automated fraud detection. With Web 3.0 knocking on our doorstep and coupled with recent advancements in AI tech, how the business will be conducted globally could be radically different.
Machine learning and AI have entered the mortgage industry, helping people navigate the sometimes muddy waters of home buying.
AI Tech is Helping People Buy Homes
The US real estate market has become relatively rocky as of late. Mortgage rates are going up, home costs are up as much as 20% in some places, and people are racing to lock in purchases before the interest rates soar above 5% for the first time in years.
Buyers have had to become competitive with their bidding and purchasing, with some rushing into the process without gathering several rate quotes from mortgage companies. Thankfully, AI tech has entered the game to help buyers do their due diligence concerning finding an affordable mortgage.
The mortgage process can often be needlessly complicated due to a lack of transparency for buyers. Even the most diligent consumer can get bogged down in quotes, numbers, and data. In this instance, AI tech works to do what human beings may fail to do: catch discrepancies and identify exorbitant fees or unnecessary charges. With AI tech on their side in the search for the best mortgage, borrowers can cut through the confusion to find the best deal for them more quickly and with far more transparency.
How Machine Learning Saves You Money on a Mortgage
The logic and process behind AI tech in the mortgage industry could be considered simple. Using inbuilt comprehensive rules based on TILA-RESPA regulations, the system can help borrowers by scanning their official Loan Estimates. The system will run through an extensive set of rules and logic that help determine applicability, market standard rate, and eligibility of any fee charged by the lender. Although, the real AI magic happens when the task is performed with the same level of discernment as a human being — or, perhaps, even better.
For example, if lender A calls its fee “X” and lender B calls the same fee for the same service “Y,” the AI bot can match them up and provide a true apples-to-apples comparison. AI tech in mortgage finance can quickly save borrowers time and effort to find a favorable mortgage offer. This intuitive technology is especially useful in today’s market, where bids are placed at breakneck speed and can pile up shortly after a house goes on the market. Buyers need to be ready with a pre-approved mortgage to remain competitive.
Synthetic Data and the Future of Securing a Mortgage
AI tech is poised to change how people compare mortgage offers in an increasingly volatile market. Tech disruptors take this one step further with synthetic data integration in the mortgage industry. Synthetic data is created by anonymizing original data and then applying AI to predict the outcome of the task at hand. In mortgage finance, borrowers can use synthetic data to predict a mortgage offer’s financial benefit (or lack thereof) from a lender.
We all know how valuable data is. Synthetic data integration allows us to see data predicting outcomes with a higher propensity.
The Consumer Financial Protection Bureau suggests that consumers never decide on a mortgage before comparing loan estimates. However, until very recently, a tool to compare official loan estimates didn’t exist. Consumers had to pour overestimates, likely missing things along the way manually.
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AI tech is stepping in to put consumer needs at the center of the process. This technology allows buyers to compare two or more loan estimates to find the most advantageous mortgage route for them. The technology gives power back to the buyer, removing much of the arbitrary guesswork and frustration that often comes with securing the best mortgage loan possible.