Technology associated with automation has been a part of the mortgage lending industry for over 30 years, but the arrival of generative artificial intelligence (AI) has brought a new era of change to the entire process. Some lenders use generative AI to boost the number of loan applications they can process and the number of borrowers they educate about the available types of loan products.
In the United States, one common automation tool in the mortgage business is Fannie Me’s Desktop Underwriter. In Canada, lenders use a wide variety of software applications to automate the process. One part of these tools is optical character recognition (OCR). This allows an underwriter or loan officer to upload an image of handwritten or printed text and transfer it to a digital format. This technology can read documents as part of determining whether a borrower qualifies for a loan and the offered interest rate.
Generative AI takes the information from tools such as OCR and refines it, using such tools as chatbots to carry out initial conversations with prospective borrowers. That way they can figure out which type of product they might want to apply for and even go through the initial pre-qualification process before a live person steps in to join the conversation. While the prospective borrower talks to the chatbot, generative AI also works on the other end, helping the lenders guide the application from the pre-qualification process all the way to underwriting and then on to closing.
For a traditional real estate mortgage, closing documents can run as large as 400 pages for all of the supporting paperwork. Generative AI can take all of that information and turn it into a series of bullet points to guide a loan officer assisting you with the process. Generative AI can also gather information from bank account statements, pay stubs, and income tax forms and compile it to make document processing more accurate. For example, Rocket Mortgage takes in 1.5 million documents per month and has achieved significant efficiency through the use of generative AI, which identifies 70 per cent of incoming documents correctly, extracting over 90 per cent of the information on those documents accurately. This reduces labor costs in terms of time spent compiling and finding this information and also reduces error rate.
Generative AI also pulls information in from telephone conversations between loan officers and prospective borrowers, listening along with the loan officer and extracting essential information. This allows the loan officer to focus more on the conversation instead of having to type information into fields while also talking with a potential borrower. This puts more focus on building that relationship with a potential borrower while the generative AI compiles the information in the background. The benefits of this include an improved relationship between the lending institution and the potential client – as well as a reduction in the error rate.
AI-Powered Mortgage Platforms vs. Traditional Brokers: Which Is Better?
The promise of using generative AI to help traditional or private money lenders can lead to some overreliance on the technology. The tools may reduce human error overall, but it is important to go back and check the work that AI does. At times, these errors, technically known as “hallucinations,” can lead to problems.
For one thing, the way that generative AI is trained means that mathematical calculations can be a weak point. Generative AI is trained to create text, taking a sizable database to guess which words should follow each other. However, math has much tighter rules, and putting together a mortgage proposal is the wrong time to be guessing the right numbers. This means that the process of calculating an amortization table based on interest rates should take place the old-fashioned way.
Another potential problem with the use of AI deals with racial bias. In a trial, ChatGPT-4 actually guided potential homebuyers to purchase in different neighborhoods depending on their race. In areas where segregation exists, these tendencies can actually exacerbate problems – and cause difficulties for building trust between traditional or private mortgage solutions specialists and potential clients.
Even so, allowing generative AI to handle the text-based parts of the mortgage while the loan officer focuses on building the relationship with his or her prospective clients. There’s no reason to sacrifice the benefits that come with greater accuracy and efficiency. The human touch is still vital when it comes to the mortgage process – buying a home is the largest financial commitment that most Canadians will make, especially if it’s their first home purchase. Even though we are in an age where consumers want the convenience of online processes, when it comes to choosing traditional or private mortgage solutions, having that human element to the process is still important.
Can AI Get You a Better Mortgage Deal?
Generative AI is definitely establishing a presence in the mortgage industry. As of February 2025, 70 per cent of lenders and 32 per cent of borrowers were using it in the process, whether it involves drawing up loan comparisons, getting real-time interest rate updates or securing automated approvals. Lenders that use generative AI report an average reduction time of 40% in loan processing.
Does going with a lender for a traditional loan, refinance mortgage or a home equity mortgage that uses AI lead to a better deal? Time is money, and lenders that can get their processing time down can also lower their closing costs because they’re not having to invest as many working hours in each account. Borrowers that rely on generative AI as part of the process of shopping traditional and private money lenders for the right deal end up spending less time on the process. That doesn’t necessarily translate into a lower interest rate every time, but if a borrower can get a loan approved and funded in 60 per cent of the time it used to take, that extra time pays off.
The Future of Mortgage Shopping in Canada
According to the Bank of Canada, more than 4 million mortgages will renew by November 2026. A significant number of those loans have not renewed since 2022, when interest rates began their gradual climb. Those rates have started to settle – both for traditional and private mortgage solutions and in the purchase mortgage, refinance mortgage, or home equity mortgage market – most of the borrowers facing renewal will see their payments go up significantly.
This means that building trust between lenders and borrowers is going to become more important than ever. Canadian law mandates that no loan term can extend longer than 10 years, so a mortgage amortized over 30 years will face several renewals over the course of the loan.
With so many Canadian homeowners set to receive bad news in the form of higher payments in their next mortgage renewal statements, a variety of traditional and private mortgage solutions are going to get a lot of Internet traffic as homeowners look for ways to refinance mortgage obligations for their next loan. Through the use of generative AI, these homeowners will have access to a wide variety of options, looking for that combination of interest rates and (in the case of the refinance mortgage option) new closing costs that will make their next mortgage as affordable as possible.
This process could become more complicated if a homeowner has fallen behind on their existing mortgage and are having difficulties finding a renewal. In that case, reaching out to private money lenders through a broker like Amansad Financial could pay dividends. If you’re looking to refinance mortgage obligations or a home equity mortgage, and your credit history has taken some damage lately, Amansad Financial may have options for you.
We helped many prospective borrowers find the funding they need whether they’re looking for a mortgage for a new home, need a refinance mortgage, a home equity mortgage or other venture. Contact Us Today or Visit one of our Common Questions Pages listed below.
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