If you want to own a home, there’s a good chance you will get some help on the internet. For example, you can explore your options online by looking at some listed homes. The internet is also a tool you can use to know the current mortgage rates. Even though most people do a lot of the heavy lifting using the internet when looking for a new home, very few close in the digital world. If you are looking for an easier way to expedite the mortgage process, you may want to learn about eNotes.
What is an eNote?
An eNote is a digital replacement of a traditional promissory note – a piece of paper that proves the borrower promises to pay the lender a specific amount of money on agreed terms. However, unlike a traditional promissory note, which is a physical note, an eNote is not tangible; it is an electronic promissory note. But an eNote still contains the same information as a traditional promissory note, including the specific property address, title agent address, loan amount, loan terms and percentages.
While an eNote is often described as the digital version of a traditional promissory note, it is more than that. The following are criteria that eNotes must meet when used during a digital closing.
- Use a format called MISMO SMARTdoc; this is a specific Extensible Markup Language for all eNotes.
- Registered on the Mortgage Electronic Registration System as proof that the document is not altered or tampered with.
- Stored in an eVault. This is an approved document management system that allows stakeholders to share information.
Lenders usually use an e-Closing solution to meet specific technical and process requirements. Notarization platforms enable all the technical eNote details – from e-Signatures to storing in an eVault. Such solutions integrate the e-Note seamlessly into the eClosing workflow, ensuring its validity.
Currently, the traditional promissory note no longer makes sense in today’s world for several reasons. One significant reason why titling professionals are turning to e-closings is safety. The traditional promissory note can quickly get misplaced or destroyed by natural disasters, or the ink can fade. Since this piece of paper is irreplaceable, such events result in a complex process for the lender or buyer. The odds of something happening to a physical note are high, considering the life of a 15-year or 30-year mortgage.
The following are the top reasons why lenders use eNotes today
Cost-effective
Switching to fully-digital closings allows lenders to save an average of $444 per loan. This amounts to significant savings, benefiting lenders, employees and customers. Using eNotes means the process is handled electronically; therefore, there are fewer overhead expenses, allowing lenders to save money.
Reduced errors
One major downside to traditional promissory notes is the high risk of errors. For example, a physical promissory note may have missed signatures or misspellings. In such cases, both parties need to meet to correct the mistakes; this is usually time-consuming and inconvenient. However, when using an eNote on an eClosing platform, borrowers sign electronically, minimizing room for error. Additionally, making any needed adjustments or changes is easier because the turnaround time is fast.
Time efficient
Using eNotes eliminates the need to process and mail physical documents, making loan processing easier and faster. Digital closings are two hours faster than traditional closings making them the preferred option for most lenders.
Increased customer satisfaction
The modern consumer values speed and convenience, even in the mortgage world. Buyers are increasingly turning to online options throughout their home buying process and expect most, if not all, of the transactions to be done digitally. Buyers prefer eClosings over paper-based mortgage closings due to the ease of use and time savings. eClosings also increase buyers’ and lenders’ options since distance or location is no longer a limiting factor.
Transparent
Usually, when using traditional promissory notes, only the person with the physical note can view the information. However, with eNotes, stakeholders can view the note at any time and see the progress of the eNote in the closing process.
Many industries and organizations are digitizing their processes to keep up with the current times. Slacking on this recent advancement puts your business at risk of being irrelevant to the modern consumer. When designing the future of closings at your organization, it is essential to look at how eNotes fit into your process.
