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Whatever loan you go with, a loan application submitted via the Internet is subject to the same rules and guidelines as a loan application submitted in a bank, credit union, or other physical location. Typical information required—earnings statements, verification of employment, debts not noted on credit reports—remains the same.
It is important to note that while you can search the world over on the Internet, you need to deal with companies licensed for your area. Most loan companies announce the areas they serve on their Web sites. Loansnap.com, a New England-area financial services provider, notes on its home page that it services Massachusetts, Connecticut, Maine, New Hampshire, Rhode Island, Alaska, Colorado, and Florida. If the online offering does not note where it is licensed, ask.
You’re the Borrower
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One of the greatest advantages to online mortgage sites is the time saved. You can shop rates, compare packages, and apply for approval online without leaving your home or sacrificing personal time.
| Online shoppers tend to be much more comfortable with the dizzying array of mortgage packages and are better prepared to nail down the best deal when meeting (virtually or face to face) with a loan officer.
There are mortgage hunters who prefer to use Internet mortgage sites to shop and preview various loans. Many lender sites now offer mortgage estimating tools to help hammer out a loan plan. The visitor plugs in a loan amount, a loan term, and the desired down payment amount. These estimators allow you to play with interest rates and repayment schedules. 15 years at a fixed rate a bit high? Compare a 20-year term loan. Look at buying down a point and how that would affect monthly payments.
A growing group of mortgage shoppers is comfortable with the Internet, aware of online security requirements, and has no qualms about typing in personal information, including Social Security numbers. They’re confident in their mortgage knowledge and find “virtual” human contact enough for them.
Lenders and brokers are moving to cater to the needs of savvy, online applicants. E-LOAN, an online consumer-direct lender, calls its approach “high-tech, high-touch”. Tiffany Kelley Fox, a public relations officer for E-LOAN says, “Customers communicate with their dedicated personal loan consultant (one point of contact) via telephone and/or email. Every customer is unique as is their preferred method of communication, and we cater to each individual's preference.” So instead of feeling like an Internet number or client who is passed from associate to associate, clients can develop a one-on-one relationship with their own e-broker. Another e-lender, Home123, allows consumers to receive e-mail updates on their application status.
It’s an E-Merging Process
It’s hard to judge the size and impact of this emerging field. Gabe Minton, vice president of industry technology for the Mortgage Bankers Association, says “it depends on how a person defines the ‘online’ process.” In Minton’s view, most lenders today have some online components—mortgage tools, prequalification and application forms—but, not surprisingly, the process is actually a mix: Web site forms, e-mails, phone calls, and faxing. If there is a poor credit history, questions still need to be asked. If there is a co-borrower or unrelated borrowers, more offline intervention is needed.
Not all aspects of the home loan process are fully integrated, so county registries and other municipal entities still require on-site filing. Not all lender processes have been automated either. There is still the need, in most cases, for hand-written, notarized signatures.
Bruce Cornelius, senior vice president for Internet and New Customer Acquisition at Countrywide Financial, one of the largest home mortgage originators, says “The ‘paperless’ mortgage is still in the future. But, it is not too far in the distance. The advent of the Internet and other enabling technologies and process improvements have reduced the loan approval process from days to minutes.” The stumbling block is still getting consensus and common standards put in place. “Many third parties, investors, and governmental bodies have not yet adopted e-business and/or have not agreed on common standards that would speed the introduction of a truly paperless process,” he says. Until then, Internet buyers will need to work with what is out there while pushing for safer, faster, and more complete online mortgage delivery.
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Text by Maureen Blaney Flietner
© 2005 BobVila.com
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