How to Choose Loan Servicing Software

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, it’s time to choose a loan servicing software that automates your back office efficiently, freeing up more time for what you do best – funding more loans.

Top 13 Questions to Ask When Selecting Loan Servicing Software

Selecting the right loan servicing software is crucial for streamlining your operations and achieving real, lasting benefits. With so many choices out there, it can be tough to know where to start. That’s why we’ve put together the key questions you should ask to make your decision easier. These questions are designed to help you find a software solution that’s both powerful and right for your needs. Let’s take a closer look at the important considerations for choosing your loan servicing software:

1. How long have you been selling this software?

If the software company has only been in business for a few years, be cautious. Starting a software company isn’t overly difficult: you need someone who understands the business and a few developers to bring the vision to life. Initially, a company may sell a lot of software, but soon it faces the reality of needing to provide support, fix bugs, and keep up with technological advances. Many software companies appear and disappear quickly because sustaining operations is challenging. It’s safer to choose a company that has been in business for at least 10 years—the longer, the better.

2. What kind of Support do you offer?

If the same person who sold you the software also provides phone support, consider this a ‘red flag’. Opt for an established company that can offer the level of expertise and professionalism you deserve. In a well-structured company, different departments handle different responsibilities.

3. How long for my company be up and running?


It should take less than 30 days to fully implement your new system. Running parallel systems is time-consuming, so once you switch to the new system, it’s best to discontinue using the old one. Adapt to the new system as you would adjust to riding a bike. During the demo, ensure the system feels intuitive and imagine yourself using it effectively. Ask numerous questions and request a walkthrough of a real-life scenario.

4. How do I transfer my data from the old system to your software, and what are the costs?

Inquire whether the system supports BYOD (bring your own data) for importing data, or if you need to pay the company to handle the migration. Costs are typically charged per data item transferred and can vary. Expect to spend around $5,000 for a complete data conversion.”

5. How often do you update your software?

Software updates should occur regularly, ideally around three times per year. Frequent updates often indicate that a company is actively fixing bugs rather than introducing new features. Newer software companies might release updates more often as they work out initial kinks and improvements. Be cautious of claims that all updates are for new features. Consider how often major devices like smartphones are updated, which is typically three times per year. Remember, it’s important to critically assess these updates, especially with new companies that may prioritize flash over substance. Always perform your due diligence.

6. Can I get referrals from current users using your software?

Referrals are crucial in today’s marketplace. Think about it—do you purchase anything or choose a restaurant without checking reviews first? Always search for the software name online and read through the reviews. We live in a time where the opinions of complete strangers, often reflected in their 5-star ratings, heavily influence our decisions. If a company has only a few reviews, it’s wise to consider another provider with a more robust set of positive reviews. More positive feedback generally indicates a more reliable product.

7. Does your Software have an API?

An API, or Application Programming Interface, enables different software applications to communicate with each other. If you have a specific program you enjoy using and want to integrate it with your loan servicing software, an API makes this possible. It streamlines tasks that would normally be manual, such as transferring data from an Excel spreadsheet to your preferred application. For instance, if you have a CRM system you rely on, an API can facilitate seamless data exchange with your loan servicing software, saving time on tasks like downloading, comparing, uploading, and storing data. Who doesn’t need more time?

8. Can I manage my Fund/Pool/MIC with your software?

If you’re operating a Fund, it’s essential to confirm that the software can accommodate your specific type of Fund, not just any generic model they might predominantly support. Given that there are at least three distinct ways to manage a pool, basic software may struggle with even simple Fund structures. If your business operates with a complex model, it’s crucial to ensure the software is capable of handling your specific requirements.

9. 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.

10. Does your software have a borrower portal?

The system should have a place where your borrowers can make payments, see their account history, and print their tax forms. 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.

11. 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.

12. 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.

13. 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 44 years of design and experience, unlike any other system in the market.

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