Applying for a Mortgage Online

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When applying for a mortgage online, check references, security, and the history of the company before revealing personal information. The Potential for Savings With 24-7 availability and automated underwriting technology, there’s a lot to like about seeking a mortgage online—and there is always the possibility of saving money. By using the Internet, mortgage lenders and brokers can cut the overhead of brick-and-mortar buildings by operating from call-centers that homebuyers will never see. And with homebuyers doing some of the work themselves by filling out forms online, the need for—and cost of—loan staff is reduced. Theoretically, those savings can be passed on to consumers. One Internet lender claims that consumers routinely save $1,500 on fees at its site. In a 2003 report, Boston-based research firm Celent Communications noted that traditional offline mortgages cost $1,200 to $1,500 per unit. Online originators with automated processes claim costs of less than $500 per loan. But consumers must be careful. Lisa Geisweit, a former senior mortgage loan originator, says, “The customer saves money through fees with an online lender, if they save anywhere. Typically, though, there are hidden fees or exceptions on the loan if the company is strictly an ‘online’ company.” Geisweit says she has seen examples where online lenders did not disclose an origination fee up front. “An original good faith estimate could have one rate on it and, at closing, the rate could be completely different,” she warns. Ask upfront about fees associated with the loan package you are considering, and be mindful that different loan options may have different fees, even if they are from the same lender. “Many companies considered ‘online’ are actually ones that advertise only online but have brick and mortar somewhere in the U.S.,” Geisweit says. “To find the best rate, however, is a matter of research. Depending on the customers’ credit scores and loan scenarios, they may get the best rate at their own credit union or bank.” All Brokers and Lenders Are Not the Same Storefront or not, brokers charge fees. It’s no different on the Internet. When searching online for your mortgage lender, learn whether you are dealing with a lender, a broker, or a lender-broker. Lenders can offer loan programs available in their portfolios. Brokers search the vastness of the loan frontier for wholesale loan products to offer you. They make their money by adding on a broker’s fee. If you deal with a broker, ask how he or she will make money on your loan and what the fees will be. Then negotiate. There are many Internet businesses that are neither brokers nor lenders. Instead, they sell your request for information to several different companies. The benefit to potential homebuyers is the ability to receive multiple competitive quotes on loan packages. However, shoppers cannot be certain which loan companies will submit a proposal for consideration.

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