If you are servicing your loans in-house, you probably have outgrown your excel spreadsheets, or worse, found a mistake. Maybe you went the custom software route and have spent a small fortune already, not to mention you now are becoming a software company. Maybe you already bought something and realized it does not do what you expected it to, or what was promised it would do. Now you must choose a software that will automate your back office and give you more time to do the things you like to do – fund more loans.
The top 13 questions you should always ask are nicely condensed here:
1. How long have you been selling this software? If only a few years, be concerned. Starting a software company is not that hard. You have someone who understands the business and hires a few developers to execute the vision. Company sells a lot of software in the beginning, then realizes it must provide Support, and fix bugs, and stay up with technology. Software companies come and go but staying in business is hard. You want at least 10 years. The more the better.
2. What kind of Support do you offer? If the same person who sold you the software is the one who will be providing support over the phone, read ‘red flag’. You want an established company who can provide you the level of expertise and professionalism you deserve and need. Different departments do different jobs.
3. How long for my company be up and running? It should take less than 30 days to be up and running with your new system. Running parallel is very time consuming. Once you let go of the old system, you should forget it. Get acclimated to the new one and it will be like riding a bike. Make sure when you do a demo of the new system, you feel it is intuitive and you picture yourself doing stuff in it already. Ask a lot of questions during the demo. Ask to be talked through an actual scenario.
4. How do I get my data from the old system to your software, and is there a price? Ask if the system has an import to BYOD, bring your own data, or you can pay for the company to do it. The charge should be for every single piece of the data to come over. It varies in price. You should be looking somewhere in the 5k neighborhood for a data conversion.
5. Is your software web-based? You should have the ability to go to any browser, type in the site and put in a username and password. That simple.
6. How often do you update your software? Software gets updated regularly, but you should expect about 3 releases per year. More releases always mean more bugs that need to be fixed, and not so many new features. New software companies tend to do a lot of updates because they are starting out and have a lot to fix. Don’t let them tell you it’s all new features. Think how many times your phone does an update per year. Three or so, right? New Software companies have lots of shiny things. Do your due diligence.
7. Can I get referrals of people using your software? Referrals are so important these days. Do you buy anything, or eat anywhere without looking at the reviews? Always type in the name of the software and look for reviews. This is the era where we trust complete strangers and their 5 stars. If a company only has a few, look for another one that has more reviews. This is one of those cases where more is better.
8. Does your Software have an API? Application Programming Interface is the technical term for applications communicating with each other. Maybe you built or purchased a program you really like and want to connect it to your loan servicing software. Through an API is how you would accomplish that task. Things that you would do manually, like downloading something onto an Excel spreadsheet and uploading it onto your desire application, the API can solve. Maybe you have a CRM system you love and want its data to communicate with your loan servicing software. That is where the API would be your dream. It is a timesaver on downloading, comparing, uploading, storing, etc… who does not need more time?
9. Can I manage my Fund/Pool/MIC with your software? If you are running a Fund, this is a must question to ask. You want to make sure your software supports the Fund you are running and not the one they want to impose on you, because that is the only kind they have built. There are at least three different ways of running a pool. Basic software will have a hard time handling a simple Fund. If your business has a complicated model, you really need to ask the right questions.
10. Where is your Development Team geographically? Why is it important to know this if I am getting a product that looks great already? The fact that the software has a great look, does not mean the calculations are right. You want something that is bullet proof. Imagine if there is a problem/bug in the software and the Development Team is in a country far away. What if the person in charge of that team resigns from the job (in that country)? How long until they find the bug? Remember there are millions of code lines to go through. Your Development Team needs to know exactly where the code lives, and how it is written.
11. Does your software have a borrower portal? The system should have a place where your borrowers can upload documents, make payments, see their account history, print their tax forms, etc. Taking it a few steps further is having a portal where borrowers can apply for a loan, upload required documents, and you can chat with them as needed.
12. Is there an ability to send text messages form within the software? Texting in today’s world is imperative as more and more people have access to a cell phone more than a computer.
13. Does the software have electronic filing with the IRS? This is a must. The IRS requires that anyone filing more than 250 returns per year must file electronically. If you are doing less, you can still file electronically for easiness.
Bonus question:
- Does your system manage fractionalized loans? Meaning, can I fund a loan using multiple investors at different rates and with multiple amounts? The answer will not always be yes. However, if it is, ask them to show you how it works to make sure the calculations are accurate. Have a scenario you know the answers to and can easily corroborate.
Self-explanatory bonus questions that may or may not apply to you:
- Does the system do adjustable rate mortgage with multiple adjustments within a period?
- Does it handle default rates?
Now that you are armed with a plethora of questions, get a live demo, and see it in action. Happy Loan Servicing Software shopping.
The Mortgage Office software is the premiere and most trusted system in the lending industry. It spans over 45 years of design and experience, unlike any other system in the market.
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