Imagine falling completely in love with a house. Together with your partner you go to a mortgage advisor. You talk about your situation, the advisor tells you that you can buy the house. Totally happy, you call the real estate agent and yes, you come to an agreement with the seller. Signatures are drawn, mortgage applications submitted and supporting documents gathered. And then it turns out: your income situation does not meet the requirements of the lender. There goes your dream. The purchase must be called off.
The disappointment you feel as a customer is enormous. But the mortgage broker also has a stomach ache from situations like this. That’s why prevalidation is so valuable. With prevalidation, you already test the data against the lender’s lending criteria during data entry.
While the advisor is in conversation with the client, the client enters the personal data into the advisory software. As the file is filled with information, the system continuously monitors whether the mortgage application is feasible. An average review consists of as many as 200 decision rules. All of those rules are applied simultaneously.
Prevalidation vs. Guided Advice
Prevalidation is an extension of Guided Advice. Whereas Guided Advice looks at the situation primarily from the client’s well-being, without including specific products, prevalidation involves a very specific and fine-grained review of a product provider’s criteria.
To use prevalidation effectively, comprehensible feedback is important. The mortgage application is often constructed in front of the client. So it requires both a simple visual final conclusion and detailed information about the outcome of the various testing rules, the why. We at Rulecube like to work with a traffic light indicator. The traffic light is easily understood by the client. In addition, textual information is then provided about the underlying cause of an orange or red light, giving the advisor an opportunity to adjust the application.
First time right
Prevalidation offers a huge increase in “first-time-right”: the proportion of mortgage applications that can be approved immediately, compared to applications that are adjusted afterwards. The impact of this is significant: processing times are shorter, the time load on the advisor and the uncertainty for the client are lower.
Want to know more about prevalidation? Read the case study on the implementation of prevalidation at one of our customers here.
During a personal demo we can go deeper into your specific needs and challenges. You can request it via the button below.