You have options when you are looking for a home loan. You can go to a traditional bank, or you can use an online mortgage company. According to one banking survey, about 25 percent of loan applicants now apply online. If you are ready to apply for a mortgage, you should consider some of the advantages of using an online lender.
Lower Rates and Fees
Online lenders typically have fewer overhead costs than brick-and-mortar banks. Lenders can pass the savings from lower overhead costs on to customers in the form of lower rates and fees.
Because it is so easy for borrowers to shop around, there is a lot of competition for online mortgage companies. This competition means that online lenders want to offer the most competitive rates and fees possible to attract borrowers in a competitive market.
Easier Approval
Because traditional banks have stricter financial restrictions than online lenders, they typically can’t offer the same variety of mortgage options. Traditional banks also often have higher minimum financial requirements for loans. If your credit score is a concern, it will likely be easier to find an online home loan lender who can offer you a mortgage with a lower credit score.
Less Time and More Convenience
If you apply for a mortgage with a traditional lender, you will need to make time during the day to go into the office equipped with copies of all of your required documents. When you apply for a mortgage with an online home loan finance company, you can upload all of your documents directly to the lender from your home computer whenever is most convenient for you. You can usually check on the status of your application at any time and instantly upload any additional documents or information that might be missing from your application. Your loan application is less likely to be held up due to incorrect or missing information.
When applying for a home loan, you should shop around for the best terms. To shop for a traditional mortgage, you will usually have to visit each bank or mortgage company’s office to get the information you need to make a decision. When you look for home loan lenders online, you can quickly and easily gather information from several companies without ever leaving your house. The ability to easily compare lenders online makes it more likely that you will find the loan that works best for you.
Since online lenders have automated most of the loan application process, they tend to take less time to process applications. One study found that online mortgages are processed almost eight days faster than traditional mortgages. Faster processing times mean that you can potentially reduce the closing time on your home purchase. You might also be able to get nearly instant pre-approval, which can be vital when competing with other home buyers.
How Do You Choose a Mortgage Lender?
Once you decide to apply for a mortgage online, you will still need to choose the right online lender for you. There are several factors that you should take into consideration:
- Rates
- Fees
- Types of mortgages
- Terms
- Customer service
Borrowers all have different needs when applying for a mortgage. The best lender for you will depend on your specific mortgage priorities. If you have good credit, you might be looking for the lender that can offer you the lowest rates and fees or the best customer service. If you do not have good credit, you might need to look for a lender that offers home loans with lower minimum qualifications. Some lenders might offer special mortgages for first-time buyers or veterans.
The level of customer service will also vary between online mortgage companies. Some lenders might offer 24-hour customer service, which can be important for people who work long or non-traditional hours. If you want the convenience of applying for a mortgage online but also want more personal service, you might want to look for a lender that gives you a contact to call with questions or concerns.
Online mortgage lenders can offer borrowers the advantages of time savings, convenience, and lower costs. If you shop for a mortgage online, you can easily compare lenders and find the right loan provider to fit your specific home loan needs.