Mortgage Quotes on the Blockchain
The blockchain is the underlying technology that allows digital currency such as Bitcoin, Ethereum, and Litecoin to generally be securely traded between two parties. The blockchain uses cryptography to secure information packaged into blocks which are then linked together in a chain of transactions. This allows these assets to be quickly transferred around the globe using a decentralized network through computers or smartphones without requiring an intermediary such as a bank or payment processor.
The blockchain was first developed by ‘Satoshi Nakamoto’, and released to the public in 2009 as part of Bitcoin, where it is used to verify pending transactions on the network. By using cryptography to link each block containing transaction data to all previous blocks, this process creates an accurate ledger of all previous transactions and prevents a person from spending the cryptocurrency twice.
Smart contracts are one of the most groundbreaking aspects of blockchain technology. The basic concept is that contracts can be stored on the blockchain and automatically executed when certain conditions are met, eliminating the need for centralized authorities or middlemen.
Although it continues to be used for new crypto coins like Dogecoin or Ether, the blockchain can also be used to streamline the process of getting a mortgage quote, process and potentially approving loans.
How Blockchain Can Be Used In The Mortgage Process
Blockchain technology could be used by lenders to automate mortgage-related tasks and further reduce the costs of issuing a new loan. For example, when you apply for a loan, all of the information about your credit score and your income etc can be accessed instantly. Smart contracts can be created to automatically approve loans and release the funds as soon as all of the requirements are met. This means that there is no need to process paperwork and communicate between multiple third parties, meaning that the entire process is streamlined. During the financial crisis paperwork was lost, confusion set in at times regarding if the lender owned the property or not, as documents went missing, etc, however on a blockchain this becomes more difficult to lose documents. Mortgages on the blockchain can also help aid in fighting loan discrimination, as well as creating a pathway from the materials used to build homes, to the builder, to the loan originator and real estate agent, the lender to the servicer, the servicer to the investment firm, to the bondholder. It also helps with situations such as in the mid 2005 or so era when drywall became toxic and people became ill due to this. Having the materials on a blockchain could help aid in figuring out which homes may be affected. It also could help aid in insurance claims, as one might be able to view any and all claims on a property before they purchase it, or more serious issues such as sinkholes, fires, flooding etc. If the collateral mortgage/debt obligation were to go into foreclosure, one might be able to view the history of the mortgage and parcel to see where the issues might lay, such as fraud, perils, or other potential situations.
Lenders could take advantage of the disintermediation afforded by blockchain technology, as there are no or minimal fees when transactions occur between nodes on a network. Therefore, making payments would not require an intermediary like a correspondent bank, and would be more secure since the payments are verified by a majority of nodes on the network.
What Are The Benefits Of Mortgage Quotes On The Blockchain?
Using the blockchain for mortgage quotes and loans could increase both the efficiency of the process as well as reduce costs.
Firstly, it would eliminate paper-based processes such as sending documents back and forth between different parties to verify information such as a borrower's income or credit score etc. It would also mean that there is no need to send out physical checks to borrowers, further eliminating costly delays in the process.
The transparency afforded by blockchain technology would also be of great benefit when issuing mortgages and securing new loans. Since all records are stored on a ledger that is almost completely hack-proof, it should mean there are fewer errors when creating and processing mortgages.
This security also means that information about borrowers would not be compromised by hackers and would be almost impossible to access by third parties, meaning that the sensitive financial information of millions of people would not be available for exploitation on the internet.
By having an unbiased opinion of a mortgage quote, where one might be able to obtain quotes on a website without putting any potential discriminatory behavior could help prevent unfair treatment, or at least the thought of it. MortgageQuote.com's goal is to gear towards an online system like this, so one can type in any information into the system that is only needed for a mortgage quote (general scenario quote, nonbinding), without having to speak to a mortgage broker directly. We want to empower you to get quotes, put in your own situation so that you have the ability to direct which mortgage program that meets your needs.
Using Cryptocurrency As Collateral For Loans
Cryptocurrency is becoming a very popular investment choice and many people hold a lot of their assets in the form of crypto coins. Financial institutions like Fidelity are starting to realize that crypto is here to stay and they need to accommodate it. That's why they are offering a new type of loan that allows people to use their cryptocurrency as collateral. In the future, it is likely that this will become more common and you may be able to get a Bitcoin mortgage.
The current process of getting a mortgage quote and having your loan approved is very lengthy as compared to where it could be. There are a lot of moving parts and multiple third parties involved, so it's easy for things to slow the process down. However, by using the blockchain and creating smart contracts, every step can be automated and executed as soon as the requirements are met. This means reduced administrative costs, which can be passed on to the customer. The decentralized nature of the blockchain also increases security and combats any danger posed by cyberattacks.
Blockchain technology is still relatively new and we haven't yet explored all of the amazing possibilities. But it looks likely that it will change the way that mortgages are handled in the future.