Paperless Mortgage 101
When looking for your next home mortgage, you may not realize that you may have an option to go with a completely paperless mortgage if your lender offers this service and if the Recorder of Deeds in your county accepts electronically signed documents for recording.
This means digital documents, limited in-person interactions, and a theoretically faster process overall. So, how does it work and what are the main benefits of going paperless with your next home mortgage?
The Paperless Mortgage Process
The paperless mortgage process is a relatively new way of going about the mortgage process and most people do not even know that it may be an option. The paperless mortgage process can limit face-to-face contacts, while simultaneously allowing for e-signatures, cutting down on commuting time.
So, how does it work? Using secure technology and online applications, you can review and sign documents from a computer while staying secure.
Paperless Mortgage Benefits
There are many benefits of going with a paperless mortgage process. Here are a few you can expect to come across if you choose paperless for your next home mortgage.
Save Time with Digital Forms
Signing and reviewing forms and files digitally—rather than in-person—saves time, saves you a trip into the office, and prevents any unnecessary face-to-face interaction.
Security of Digital Files
Files stored digitally can be potentially safer when stored on secure cloud drives or computer hard drives. Assuming that proper security measures are taken, digital files also have the benefit of being recoverable.
Reduced Waste
To go green, going paperless means less paper waste. You do not need to review a stack of papers when you could have them digitally. Instead, everything you need is online and can be sent via email.
More Access to Files & Forms
When forms and files are stored digitally, you can have access to them at all times through secure servers and logins rather than only seeing them in-person. This means you can review them whenever and wherever you are.
Reduces Person-to-Person Interaction
In today’s climate, we all want to stay safe and keep each other safe by limiting how much personal interaction we have with others on a day-to-day basis. With a paperless mortgage process, you can review and sign documents digitally, limiting how much time you have to spend with documents in person.
Paperless Mortgage Risks
With the benefits and advantages of a paperless mortgage come a few risks you must acknowledge. Whether it’s getting over distrust of digital documents, the risk of illegal tampering, or finding a lender and recorder who accepts paperless mortgages, here are some of the hurdles you’ll have to jump in order to get a truly paperless process.
Illinois Does Not Have an Established Notary Process
One thing you should know about Illinois is that it does not have an established notary process for digital documentation. Also, remember that documents must be kept safely in your files through the statute of limitations plus ten years. While under COVID-19 19 emergency orders by the Governor, certain types of notarizations are permissible remotely, however, Illinois has not fully enacted Remote Online Notarizations as has several other states.
Many Lenders Are Not Comfortable with Paperless Mortgage
Old habits die hard. And, for many lenders in the United States, that means they still are not comfortable accepting paperless mortgages and handling digital documents. This apprehension contributes to stagnation towards the paperless mortgage movement.
With mortgages, there can be a lot of moving parts and people involved and for a paperless mortgage to work, everyone must be on the same page. Unfortunately, this can sometimes make it difficult to have a fully digital mortgage process.
Many Buyers Do Not Trust It
Much like with lenders, many homebuyers are also skeptical or unwilling to move to a fully paperless mortgage. For many, that skepticism stems from a lack of trust in the security of digital documents or in the system as a whole.
It is understandable that having a digital copy of important information can seem risky but with advances in IT and cybersecurity, digital documents are as secure as ever.
Documents May Be Altered Illegally
When you remove in-person signings and documents you also introduce the chance that documents can be altered illegally via an accidental email or some other type of leak, insecure passwords, or outright fraud.
Even this ignores document altering capabilities from the tech-savvy, who can take a perfectly acceptable agreement and potentially corrupt it.
Recorders May Not Accept Paperless Mortgages
As mentioned above, a paperless mortgage requires a lot of people to accept the paperless process. If one cog in the machine says no, then that usually means the entire process will be done in-person with physical documents. In this case, the Recorder must be willing to accept digital documentation to record the mortgage.
Going paperless with your next mortgage may be a viable option that can save time, energy, waste, and more. So, next time you are looking into securing a home mortgage, ask about paperless and see the benefits first-hand.
To learn more about the mortgage process, schedule an appointment with a real estate lawyer at Lee Scott Perres, P.C.
