Consumers are now able to conduct any number of financial transactions over the Internet. This includes financing a home purchase. There are several options available for obtaining online mortgages. Online mortgages have distinct advantages and disadvantages, which should be carefully considered before making the decision to apply for a mortgage online.
Online Mortgage Process
With an online mortgage lender, home buyers can complete the application online and even get approved before they have found a property they want to purchase. Some online mortgage lenders have automated underwriting software, which allows them to collect a minimum amount of information from the customer. The lender verifies all the information completed before proceeding to the next step in the loan process.
To apply for and to be accepted by an online mortgage lender, there is a qualification process. The borrower will need to provide financial documentation to prove their application information is accurate, including W2 statements, recent tax returns, paycheck stubs, and an accurate list of monthly income and expenses.
Furthermore, if the homeowner is selling the current home to obtain the money for a new home purchase, documentation of settlement or closing statements must be provided to show that the previous mortgage has been paid in full. The lender may offer to close the sale of the new home on the same date as the new home purchase, once all the documentation has been provided.
With an online mortgage lender, the closing process still must be scheduled. To close a mortgage with an online lender, you may have to hire your own notary, who will notarize any loan documents you have to complete for closing. Sometimes, the online lender will schedule the closing at a location convenient to the home buyer with one of their own notary officers.
Finding a reputable online mortgage lender
Borrowers can check with their state’s Department of Banking or with the Better Business Bureau to verify the lender is reputable and deals with any customer complaints in a timely manner. The way lenders respond to complaints is sometimes more important than the number of complaints file. If you see a high rate of successful resolutions to complaints, this is a sign of a lender who is working to keep their customers satisfied and provide good service.
Online mortgage lenders versus lead generation companies
There are several lead generation companies out there who offer their services to borrowers. They differ from online mortgage lenders. Their services match borrowers with the best rates of several lenders based on qualification criteria. The lenders compete for the home buyer’s business and provide the buyer with a customized loan offer. The borrower can then choose which lender best fits his unique financial situation. One of the better-known mortgage lead generation companies is Lendingtree.com. They have an “A+” rating with the Better Business Bureau. E-loan is also a top-rated mortgage site that provides borrowers with access to lending partners who can provide a mortgage loan. In addition to mortgage loan, E-loan provides consumers information and help for obtaining auto loans, home-equity loans, savings and CD accounts.
Who are some of the online mortgage lenders available?
In recent years the number of online mortgage lenders has increased dramatically. Here are a few of the online mortgage lenders available.
- Bank of America: With Bank of America, the borrower can complete the entire mortgage application process online. The pre-qualification process is simple and fast. An online mortgage counselor is available to answer any questions about the mortgage process.
- AmeriSave: AmeriSave is one of the largest online mortgage lenders in the United States. From their site, the borrower can search for the best rate and loan options for their home buying needs. Once the pre-approval process is completed, an AmeriSave mortgage loan team member works with the applicant to complete all the necessary mortgage paperwork.
- Ditech: Ditech has a mortgage loan process similar to that of AmeriSave. They offer mortgage calculators and home value research tools. This lender offers fixed-rate, adjustable-rate, and FHA home mortgage loans. As with the other lenders, the mortgage process can be completed online.
Advantages
Applying for and obtaining a mortgage loan online can spend up the home buying process. Many of these loans are offered at competitive rates. If a buyer does not have time to make the trip to a brick-and-mortar lending location, an online lender may be a good choice. Many online lenders are extensions of the financial institution’s physical location.
Disadvantages
Sometimes, information exchanges that do not happen as they do in face-to-face meetings and things may not be clear to the borrower. If choosing an online mortgage lender, the borrower should ask for clarification for any mortgage terms that are not clearly understood before agreeing to sign any mortgage documents.
For borrowers who have excellent credit and easy access to financial documents, and who have a stable employment history; online mortgages may be one of the best options available for borrowers who want a fast and convenient mortgage application, approval, and closing process.
