Should You Use an Online Mortgage Lender?
Buying a home is a huge expense and it is also one of the most stressful things that anyone can deal with. Most people lead very busy lives and prefer to find the simplest way to handle things, which is why online lenders have become a popular choice for those that are seeking a mortgage. Some full service online lenders like Quicken Loans and Lending Tree can make the mortgage process fast and painless.
However, despite the ease of use and the fast process, online lenders are not the right choice for all home buyers. Generally, the home loan application process through an online lender is much simpler, which is one of the main reasons they are so popular. There is no need to have in-person meetings, so applying online can save a lot of time and hassle. Online lenders will also offer lower rates and fees as well, which are attractive attributes. These lenders want to grab as many customers as possible, so they create benefits that cannot be enjoyed with traditional lenders. They feature low closing costs and flexible payment terms.
Since many people have lower credit scores, online lenders make a great choice for anyone with a score that is lower than 700. These lenders will not use the same underwriting investors that large banks do, so it is possible to qualify for a loan even if one was rejected at a local bank.
While there are great benefits, there are also drawbacks to online lenders. There are many companies that are scams and there is a great risk of fraud. One thing to watch for is any upfront costs that are requested. Some lenders will try to charge a fee for the application process top cover appraisals and credit checks. This should not be paid for until later in the process.
It is very common for online lenders to advertise low rates to attract attention. Once an application is filed, the company will run the credit and then state the mentioned rates are no longer available due to credit scores. This can be hard to avoid, but is something that borrowers should be aware of when applying online. Just because a lender will approve a loan, it does not mean that the interest rate will be great. In fact, lower credit scores will result in higher interest. When using any online lending company, take time to complete forms and be sure to answer questions accurately to reduce problems and save time. Simple mistakes can lead to higher fees later on, so be sure to read all information and call an 800 number with questions.