Tips for online mortgage shopping
Mortgage websites have become a tremendous boon to mortgage shoppers, not because online loans are faster or necessarily cheaper – sometimes they are and sometimes they aren’t – but because many mortgage websites provide an array of current, comparable information difficult to obtain offline.
Much like online automobile sticker-price information that tells you exactly what vehicles cost, detailed mortgage information can turn you into quite a negotiator. Information gleaned from Web sites can be used to leverage the best of both worlds – cheaper loans negotiated with online information and off line hand-holding from the mortgage broker who meets the price you find online. It’s not quite as easy as it sounds. Some mortgage Web sites offer loans; some don’t.
No-loan or “referral” sites don’t broker or lend mortgage money but typically provide mortgage content, information and news as well as mortgage rates – educational information you can use. These sites also keep daily tabs on rates, indexes and market events that push costs up or down. You also can visit these sites to obtain the latest local rates on purchase and other mortgages. The sites also provide mortgage calculators, market trend analyses, forecasts and a host of other useful services. No-loan sites are also called “referral” sites because they introduce you to other mortgage Web sites that make loans. Sites that offer you access to loans come in three varieties: direct lenders, auction sites and multi-lender shopping sites.
Direct lenders –Most mortgage Web sites are direct lender sites. They include mortgage lenders, all-purpose banks that also make mortgage loans, and others offering one, limited set of mortgage products. They are fine if, for whatever reason, you’ve decided to borrow from a particular lender. These sites typically don’t provide useful loan pricing information.
Auction sites –Some mortgage sites allow you to complete a loan application, which is sent to lenders who, in turn, compete or bid for your business. Some of the lenders are sub-prime lenders making these sites a possible choice for you if you are credit challenged. To compare more loans, you may have to repeat the process on a variety of these sites.
Shopping sites –Shopping sites are a better fit if you demand details, as you should, especially if you are a first-time home buyer. Without completing an application you can “shop” for a mortgage, often using more variables than some brokers use. You can enter the loan amount, property details and other information for the latest rates, APR, points, even settlement costs for each loan. You can also sort the loans by a variety of factors and make apples-to-apples comparisons of the cost details, including interest rate adjustments, margins, life caps, year-by-year payment totals, interest costs and tax benefits.
If you choose to obtain your mortgage online, you should know that mortgage Web sites are best suited for those with top-notch credit. Also, most online lenders write more equity and refinance loans because they are a better fit for computerized automation systems than purchase loans.
Online shopping tips
If you do apply for a loan online, follow these tips.
- Choose an online broker licensed and regulated by your state. Regulatory agencies may not be able to handle complaints about outside lenders. Remember, the broker finds the loan, but the lender actually funds it. Make sure the lender is also regulated in your state.
- Don’t double-dip. It’s easy to complete an online application, but each application could trigger a credit check. That could send the wrong signal to lenders who reject applications that come with credit reports revealing numerous credit checks in a short period.
- Don’t hit-and-run. Don’t complete an online mortgage application, say at work, if you don’t have Internet access at home or you’ll defeat the purpose of the automated online mortgage process. Online brokers use e-mail to keep you abreast of your application’s progress and some offer online application tracking.