How APIs Can Speed Up The Mortgage Loan Application Process

The mortgage revolution: how APIs can speed up the mortgage loan application process

The digitization and opening of banking infrastructure have marked a before and an after in the financial industry. Bank branches have given way to an online contract and operational model, where physical presence is no longer as necessary. Open banking has gone a step further, granting access to third parties so that all banking operations and transactions can be completed from other digital platforms, provided that they have the corresponding authorization and certify their security.

Mortgages, the core business of many banks, have not remained untouched by this new reality. In the vast majority of cases, it is still necessary for customers to go to the branch in person to negotiate the loan’s terms. But this form of closing contracts seems to be on its way out, since banking APIs aim to speed up the process for applying for and granting such loans.

The traditional mortgage application: a slow, paper-heavy process

The mortgage market has undergone an unprecedented transformation over the past 10 years, since the advent of the subprime mortgage crisis in 2008. Since then, and in order to avoid the terrible consequences of the burst housing bubble in the United States and Spain, different rules have been passed to protect consumers.

Financial institutions have had to adapt their processes to fit this new legislative framework, with stricter criteria for granting a mortgage: it is necessary to appraise the property for sale, to send all the documentation certifying the applicant’s solvency, to have the bank approve it according to its risk management and go to a notary public, with all the resulting costs.

Overall, the mortgage loan initiation process takes ten to fifteen days on average, although there is no legally set period. The Spanish mortgage law, which entered into force in June 2019, has extended these deadlines even further and, in some cases, they may go beyond a 30-day period.

Open banking as a catalyst for the mortgage market revolution

Given the mortgage market‘s special characteristics, applying for and granting a mortgage is one of the few banking processes that still requires the physical presence of customers at a bank branch. However, open banking and APIs can be the ultimate catalyst for opening a new path for automation.

In fact, according to the latest IRESS Intermediary Mortgage Survey 2019, 96% of respondents say that open banking in general, and the standardization of API use in particular, is beneficial when you sign up for a mortgage. Broadly speaking, users believe that this technology will promote more comfortable access to banking customers and help accelerate the process of applying for and granting mortgage loans.

A significant reduction in paperwork

During the application for a mortgage, a branch manager requests a series of documents from their customer. The customer, in turn, must gather all the information, prove that this documentation is in order and send it to the bank; the bank then performs the corresponding risk control and approves/rejects the application.

With APIs, this process can be significantly simplified. The new biometric identification elements have changed the way this documentation is presented; something that, until recently, seemed unchangeable. Coupled with the fact that, thanks to this open infrastructure, banks and other fintech companies can access data on customer solvency in an agile and simple way, and always with their consent, all these factors significantly reduce the paperwork and time spent on approving and granting these loans.

Easier to meet regulatory criteria

In June 2019, the new Spanish mortgage law came into force. It represented a major regulatory change and forced entities to adapt to new legal requirements. This new rule affected the entire process, from signing to canceling the mortgage loan, offering greater protection to customers and more transparency in contracts.

This adaptation has brought a number of associated costs, and a lot of confusion for both entities (how to adjust their business and systems to the new regulation) and for customers, who often are not aware of their rights under the new law.

APIs can be used to efficiently adapt some processes and to send or retrieve additional information in accordance with new legal requirements, and to provide it clearly and with absolute transparency to customers. These applications can run different tasks to ensure that the procedures meet the expected criteria.

A complete experience for customers

Mortgages are arguably the most complicated-to-understand banking product found in the portfolio of products of any institution’s commercial network. Numerous factors and variables are involved: Euribor, the French amortization system, the APR, the associated fees and commissions, the linked products…

In practice, understanding all these terms takes time, especially when we talk about something as important as buying a home. That is why an API can help customers find relevant information about their mortgage. In fact, APIs make it possible to implement a simulator where customers can find out in advance, quickly and 100% online, information about their mortgage’s payments, fees and commissions, the amortization scheme, and what happens if the Euribor goes up or down.

All this results in greater customer satisfaction and a new experience that expands and accelerates the ability to choose, while also increasing their satisfaction with the search process.

A use case: BBVA’s Mortgages API

BBVA’s Mortgages API allows you to offer your customers the necessary financing for the purchase of their home or obtaining for liquidity without having to leave their application. Thanks to this API, the sale process can be carried out from the house of the future buyer or from your own office, without having to go to a bank branch and handle all the paperwork in person.

Also, before applying for their mortgage, users will be able to find out important economic data, such as the minimum amount needed to apply, and to simulate different scenarios and determine their payments during the whole loan repayment period.

In short, the use of an API like BBVA Mortgages allows you to integrate an entire ecosystem necessary to simulate a mortgage with all its associated expenses into a real estate platform or any other platform, find out all its details, check if you can access it and proceed to sign up for it directly from a single application. All with transparency and without friction of any kind.

Source: The mortgage revolution: how APIs can speed up the mortgage loan application process

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5 Things You Should Know About Capital Gains Tax

A capital gain occurs when you sell something for more than you spent to acquire it. This happens a lot with investments, but it also applies to personal property, such as a car. Every taxpayer should understand these basic facts about capital gains taxes.

Capital gains aren’t just for rich people

Anyone who sells a capital asset should know that capital gains tax may apply. And as the Internal Revenue Service points out, just about everything you own qualifies as a capital asset. That’s the case whether you bought it as an investment, such as stocks or property, or for personal use, such as a car or a big-screen TV.

If you sell something for more than your “basis” in the item, then the difference is a capital gain, and you’ll need to report that gain on your taxes. Your basis is usually what you paid for the item. It includes not only the price of the item, but any other costs you had to pay to acquire it, including:Your resource on tax filingTax season is here! Check out the Tax Center on AOL Finance for all the tips and tools you need to maximize your return.Go Now

  • Sales taxes, excise taxes and other taxes and fees
  • Shipping and handling costs
  • Installation and setup charges

In addition, money spent on improvements that increase the value of the asset—such as a new addition to a building—can be added to your basis. Depreciation of an asset can reduce your basis.

In most cases, your home is exempt

The single biggest asset many people have is their home, and depending on the real estate market, a homeowner might realize a huge capital gain on a sale. The good news is that the tax code allows you to exclude some or all of such a gain from capital gains tax, as long as you meet three conditions:

  1. You owned the home for a total of at least two years in the five-year period before the sale.
  2. You used the home as your primary residence for a total of at least two years in that same five-year period.
  3. You haven’t excluded the gain from another home sale in the two-year period before the sale.

If you meet these conditions, you can exclude up to $250,000 of your gain if you’re single, $500,000 if you’re married filing jointly.

AdChoices

Length of ownership matters

If you sell an asset after owning it for more than a year, any gain you have is a “long-term” capital gain. If you sell an asset you’ve owned for a year or less, though, it’s a “short-term” capital gain. How much your gain is taxed depends on how long you owned the asset before selling.

  • The tax bite from short-term gains is significantly larger than that from long-term gains – typically 10-20% higher.
  • This difference in tax treatment is one of the advantages a “buy-and-hold” investment strategy has over a strategy that involves frequent buying and selling, as in day trading.
  • People in the lowest tax brackets usually don’t have to pay any tax on long-term capital gains. The difference between short and long term, then, can literally be the difference between taxes and no taxes.

Capital losses can offset capital gains

As anyone with much investment experience can tell you, things don’t always go up in value. They go down, too. If you sell something for less than its basis, you have a capital loss. Capital losses from investments—but not from the sale of personal property—can be used to offset capital gains.

  • If you have $50,000 in long-term gains from the sale of one stock, but $20,000 in long-term losses from the sale of another, then you may only be taxed on $30,000 worth of long-term capital gains.
    • $50,000 – $20,000 = $30,000 long-term capital gains

If capital losses exceed capital gains, you may be able to use the loss to offset up to $3,000 of other income. If you have more than $3,000 in excess capital losses, the amount over $3,000 can be carried forward to future years to offset capital gains or income in those years.

Business income isn’t a capital gain

If you operate a business that buys and sells items, your gains from such sales will be considered—and taxed as—business income rather than capital gains.

For example, many people buy items at antique stores and garage sales and then resell them in online auctions. Do this in a businesslike manner and with the intention of making a profit, and the IRS will view it as a business.

  • The money you pay out for items is a business expense.
  • The money you receive is business revenue.
  • The difference between them is business income, subject to employment taxes.

For more tax tips in 5 minutes or less, subscribe to the Turbo Tips podcast on Apple Podcasts, Spotify and iHeartRadio

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Jazz Wealth Managers

If you have a robinhood or active trading account it’s very likely you have just past tax return season with a lot of questions on long term and short term capital gains. While that is not our main focus here at jazz wealth, today we give you a brief and basic overview. We’re an investing service that also helps you keep your dough straight. We’ll manage your retirement investments while teaching you all about your money. —Ready to subscribe— https://www.youtube.com/jazzwealth?su… For more information visit: http://www.JazzWealth.com — Instagram @jazzWealth — Facebook https://www.facebook.com/JazzWealth/ — Twitter @jazzWealth Business Affairs 📧Support@JazzWealth.com

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