This piece originally appeared in the November 2024 edition of MortgagePoint magazine, online now.
Most people who have financed a home purchase probably wish the process was less stressful. But if there ever was one type of homebuyer who needed an easier, less complicated loan process, it is someone who actively serves in the U.S. military.
Unfortunately, those who have sacrificed the most to protect the American Dream for millions of others often find it more difficult to access their share of it themselves by being able to buy their own home. There are many reasons why this is the case, including rising home prices, and the fact that military personnel relocate frequently.
Fortunately, recent innovations in mortgage technology are making homeownership more accessible to military families, and typically, it is independent mortgage bankers and credit unions that specialize in serving military borrowers that are leading the way.
Why These Hurdles Exist
Military families face multiple challenges when navigating the homebuying process, but the fact that they are regularly transferred to different bases, and sometimes different countries, is by far the largest factor. Frequent relocations are often due to Permanent Change of Station (PCS) orders, which are official instructions issued by the military that mandate the relocation of an active-duty service member and any family members living with them to a new duty station.
Because military families can relocate as often as every year, many struggle to maintain good credit, which is a crucial factor in securing home financing-even if they have earned VA benefits. Repeated moves can disrupt the establishment of long-term financial relationships with local banks and credit unions, making it difficult to secure favorable loan terms. It can also lead to gaps in credit activity or the decision to rely on credit or out short-term financing at high rates simply to pay for life’s essentials, which can negatively impact a service member’s credit.
That’s not all. Military compensation often includes various allowances, such as those for housing, clothing, and other needs, but these allowances are not always regarded as stable income by lenders. This may create problems when a military mortgage applicant is trying to prove they have reliable income for a loan approval. At the very least, it can lead to higher rates and less favorable loan terms.
The Urban Institute recently shed light on some of these challenges in a June 2024 report, “Barriers to Homeownership among Active-Duty Service Members.” The report revealed that active-duty service members relocate at a much higher rate than the civilian population, with approximately 36% moving once every year compared to the civilian rate of 8.9%. This frequent relocation was a significant factor behind lower homeownership rates among military personnel, according to the report. In fact, the homeownership rate for active-duty members was just 41%, markedly lower than the general population’s rate of 64.5%, the Urban Institute found.
Addressing these issues requires providing military borrowers with a mortgage experience that fits their unique financial circumstances. Fortunately, some lenders are increasingly adopting modern digital technology, which enables them to provide better service and support to military borrowers seeking to realize their homeownership dreams.
One Lender’s Approach
For decades, Service Credit Union has served the unique needs of military families seeking home financing. Originally founded in 1957 to serve the Pease Air Force Base community, Service Credit Union has a robust $5 billion in assets and an extensive network spanning more than 50 branches across New England and Germany. Today, it stands as the largest credit union in New Hampshire, dedicated to serving members around the globe.
Partly in response to the unique challenges servicemembers face, Service Credit Union recently implemented advanced digital technology to streamline the mortgage process for its members, especially those facing frequent relocations due to PCS orders. Last year marked a significant milestone with the deployment of a cloud-built, browser-based digital mortgage platform that capitalizes on automation to streamline the entire lending process—from application to post-closing.
The introduction of the platform in October 2023 transformed the way the credit union interacts with its members, regardless of where they are located. The platform includes a comprehensive, user-friendly point of sale (POS) system that allows military borrowers to shop for rates, loans, and pricing, submit an application, and sign documents online from any device. The POS system also guides borrowers through the process without a loan officer’s assistance. All credit, pricing, conditions, and compliance checks happen automatically, and borrowers can receive digital disclosures ready to e-sign within minutes.
Service Credit Union’s new platform includes integrated document management technology, which enhance the efficiency of loan processing and reduces operational costs. Equally as valuable, the platform’s cloud-based nature and modular design allow it to be seamlessly integrated with the credit union’s existing systems. While traditional, legacy LOS platforms often take six months or longer to deploy, Service Credit Union was able to go live on its new platform in just four months.
The new platform also provides military members with a personalized mortgage experience, no matter where they happen to be stationed. The automation tools embedded within the platform also helped the credit union’s staff automate and expedite loan processing tasks, ensuring a streamlined process, and saving time and money for both borrowers and the credit union.
Service Credit Union is helping military servicemembers navigate the complexities of home financing and keeping the American Dream within reach for those who defend it. And other lenders can offer the same level of convenience and support, too—not just for their customers who are actively serving, but for all of them.
How Digital Technology Helps
Digital mortgage platforms offer considerable benefits not only to military members but also to the credit unions, banks, and other lenders that serve them.
For starters, a digital mortgage process significantly reduces the time it takes to process and underwrite loans. This speed is particularly important for military personnel, who may need to move quickly due to deployments or relocations. Because modern digital mortgage platforms are typically browser-based and built and delivered through cloud environments, the platforms enable lenders to scale their operations more effectively in response to fluctuating interest rates. Doing so prevents them from having to go through the ugly cycle of hiring and firing staff during significant shifts in the housing market.
Cloud-built platforms provide better security, allowing lenders to safely manage loan processing data across multiple systems. Additionally, they are often built on an open API architecture that facilitates real-time data exchanges with third-party service providers, creating more seamless integrations that help lenders simplify complex interactions. And they typically include intelligent document management tools that leverage automated document classification and OCR so lenders can compare borrower data with their own business rules and clear loan conditions quickly.
All of these features save lenders time and money, streamline the homebuying process for all parties, and improve customer satisfaction.
Doing Our Nation’s Heroes Right
This piece originally appeared in the November 2024 edition of MortgagePoint magazine, online now.
Of course, every lender can benefit from adopting digital mortgage technology to deliver customized mortgage products to their borrowers, whether or not they are currently serving in the military. And with the Fed signaling it will drop key interest rates again, now is an ideal time to implement these innovations.
For lenders, lower rates would mean both a potential increase in loan volumes and an opportunity to offer more competitive rates and flexible terms. With digital mortgage technology, lenders can accomplish both goals while avoiding the bandwidth issues that plagued them during the last refi boom.
In short, it is a strategic moment for lenders to enhance their engagement with military borrowers. It is about more than creating greater efficiency and reducing costs—it is about making sure they have the same shot at homeownership as everyone else. Adopting modern digital mortgage technology brings lenders one step closer to providing peace of mind and stability to families who live a life of mobility and uncertainty.
Ultimately, by investing in digital technology, lenders can demonstrate their commitment to service that mirrors the commitment military families make to our country. This not only improves efficiency but also strengthens the foundation of our society by making homeownership an attainable reality for all.
