Technology reformed the banking and financial industry in unprecedented ways. With the advent of the internet and phones, bank customers can now pay their bills and mortgage payments without ever stepping out of their homes. With seamless financial transactions, mortgage lenders and private mortgage insurance (PMI) providers can efficiently complete their disbursal and collection processes with a few clicks. These financial institutions actively adopt multiple payment technologies to help home buyers pay their home loans effectively.
Collect Mortgage Payment Using These 5 Ways
While buying a home loan, most smart customers don’t only look at low-interest rates. Instead, they also look at the convenience and hidden costs offered by a lender. Studies show that most customers with an excellent credit score are willing to pay a slightly higher interest rate when buying a home loan if offered suitable convenience from day one.
To streamline your mortgage loan processes and attract more customers, you must ideally offer the best in class services and multiple payment options. Let’s see five ways how you, as a lender, can start collecting principal and interest from your customers.
Method #1: Mail or Money Order
Some customers still like to pay their loan amount back using the old-fashioned methods. Although outdated, you must still keep this payment option open for your customers. This is the primary mode of payment for customers based out of remote locations with little to no connectivity.
- Pros: It is one of the surest ways of collecting payments since there is no room for technological error.
- Cons: It may take several days for the payment amount to reach you via this method. So, you need to ensure that your customer considers the slow processing time while conducting the transaction.
Method #2: Phone
For people who are not comfortable using technology, payment via phone is the next best option. You can offer this payment method to elderly customers who do not know how to pay using the internet.
- Pros: It is one of the simplest methods of transferring money. So, you can attract the older generation customers by keeping this payment method open.
- Cons: You need to install extra human resources to handle the phone payment requests.
Method #3: Hosted Payments Portal
Hosted Payments Portal is one of the fastest ways for your customers to pay you back. It is also seamless and affordable, often with low processing fees.
- Pros: Payments processed through the hosted payments portal are lightning-fast and active almost every day (even on bank holidays and weekends).
- Cons: Since this payment is manual too, your customer may forget to pay you on time. Therefore, you need to have systems like SMS payments, and Email Invoicing to remind them to pay.
Method #4: Credit Cards
You can also collect payments through credit cards. Several customers prefer paying through credit cards because it gives them an extended grace period in addition to the existing loan terms.
- Pros: Like internet banking, processing through credit cards is usually super fast. So, you receive the amount instantaneously. It is also the preferred method of individuals who are often strapped for cash or not comfortable using technology to pay.
- Cons: Customers with enough bank balance do not prefer paying their loan payments and insurance premium through credit cards due to higher transaction fees. They usually prefer internet banking or ACH automated payments Learn more about credit card processing.
Method #5: ACH Automated Payments
ACH payments solution is undoubtedly one of the most popular methods of paying mortgages today. The number one reason why customers prefer it is because of automated transfers. After the initial setup, you can easily and automatically collect payments from your customers’ bank accounts on a preset schedule. This way, you don’t need to waste time reminding them to pay every month.
Pros: Some of the other reasons why customers prefer paying through the ACH technology include,
- Fast processing
- Secure network
- Low transaction fees
- More reasons why you should offer ACH payment options to your customers
Cons: The initial setup time required to activate ACH payment is slightly longer. However, the best banking partners usually have tie-ups with reliable third-party payment processing companies. The top payment processing companies like iCheckGateway.com help the banks set up a seamless integration to collect payments through ACH. They also help the customers directly in case of any questions or customer service requests. Does your bank offer an ACH automated payment offer? Learn how to set up loan payments with ACH.
Other Services You Can Offer
As a lender, you can offer a few other services to sweeten the deal and attract more customers. These include:
- Low closing costs and title fees
- Instant disbursements
- Low or nil pre-closure fees
- Mortgage payment calculators
- Afford calculators
- Attractive insurance premiums
- Longer repayment tenures (up to 30 years)
- Schemes and discounts on VA loans for the veterans
The purchase prices for real estate in prime locations are going through the roof now. Your customers are probably already facing a financial crunch after purchasing a new home. You can ease their pain by offering them more affordable mortgage payment methods.
Partner up with a reliable payment processor to provide your customers the convenience and affordability to pay their loans via ACH and credit cards. Download our product catalog and learn about the variety of payment technology solutions for your business.
Date originally published: 17 December, 2021