Wednesday, August 14, 2013

How Does Loan Pricing Software Work?

There are a lot of variables in mortgage loan pricing, but loan pricing software can help to take the guesswork out of it. How does loan pricing software work? A good pricing software package will start by collecting the best information possible to help create the decision pricing matrix. This will help lenders choose the right loan product for the customer visiting the site based on their qualifications. It then offers investors and lenders a way to view those pricing matrixes so that they can create one or more loan packages that are profitable for them and exactly what the customer needs to make a decision. It streamlines the loan process, makes offers more accurate, and provides a range of choices for different loan packages to the customer shopping for a home mortgage loan.

Automated Valuation Models

One of the best features of loan pricing software is the Automated Valuation Models (AVMs) that can guide lenders to make an accurate valuation of the property the first time around, avoiding loan reprocessing. Automating valuation models provides a better basis for home evaluation so that if prices are depressed in an area a high valuation from an assessor won’t go unnoticed. You don’t have to rely totally on the word of someone who may not have access to all the tools necessary to make an accurate evaluation based on current market trends. (Source: LoanLogics Origination)

Risk Management

Good loan pricing software can help you manage risk during the loan process. You want to be sure that you are offering the best loan package to be competitive, but you don’t want to make it too risky. The software might pull up a variety of different loan solutions to cater to a specific customer and also tell you if they do not qualify for a particular loan type and why. It will also offer a variety of interest rate options that might appeal the buyer. The picture it presents to the borrowers is more accurate and can help them plan for their new mortgage payments and household budget. If borrowers are ineligible, the software will notify the lender right away, before too much effort is expended, and this can help to avoid loan fallout after going through the entire lending process.

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