With the rise of online financial services and their convenience, we know many potential homeowners are asking if they should get a mortgage online?
We’re going to set the expectation right now, for most people, you shouldn’t get a mortgage through an online lender.
Whether you're a first-time homebuyer or a seasoned real estate investor, let’s go over why we don’t think getting a mortgage online is the best choice.
Getting Your Mortgage Through an Online Lender vs. Mortgage Broker
Less Hands-on Help
When you get a mortgage with a broker, you'll have the advantage of working directly with a person. On the other hand, when you get a mortgage online, you won't always have a real—or same—person working with you.
Yes, you may not get a person on the other end of the chat, but first you’ll have to go through a chatbot.
Getting a mortgage online comes with less hands-on help. Now, because most of the work we do can be done over the phone or email, you won’t necessarily have to meet in person.
But if you have a question or if something goes wrong, it's always nice to have the phone number of someone involved in the process.
More Error Prone
While it might seem easier to fill out a loan application online, these applications can be pretty complicated.
Are you working with multiple people? Do you need a co-signer? Is this for a rental property?
When you're doing it on your own, you have a higher chance of making mistakes than if an experienced mortgage broker was guiding you through the process.
You May Not Get Lower Rates
Often, the pull of online lenders is that they advertise incredibly low rates, but unfortunately, many clients do not qualify for these rates.
The rates they post online are the best of the best. Best credit score, best down payment, best debt ratios…you get the picture.
They'll put you through the tedious process of applying and underwriting, only to be hit at the end with a higher rate than expected.
Potential Extra Fees
Something to be wary of with advertised low rates, beware of pre-payment fees and payout penalties.
What do they say about things that seem too good to be true?
It's Not That Much Faster
Many people choose an online mortgage lender because they think it will be faster than doing it with a mortgage broker.
Here’s the thing; a mortgage approval comes down to how fast you can get paperwork in and how quickly the mortgage lender can underwrite the file.
Most of the time, if you’re ready with all your paperwork, this can happen within three business days. The online mortgage lender will still need to verify all your documentation, so they will also likely need three business days to check your credit, call your employer, review with the mortgage insurer, verify your down payment, and more.
More Hiccups
If you have a low credit score or are self-employed, a ‘digital mortgage’ may not be the best option for you.
Digital mortgages were designed for those with ‘normal circumstances’ (whatever those are). As a result, those with a situation outside of the norm will often find themselves having to wait longer than usual when applying for a mortgage online. In addition, these folks will also likely have to provide more paperwork and will have more hoops to jump through.
And not all online mortgage lenders will have the type of mortgage you need either. If you’re looking at a reverse mortgage, a rental property mortgage, a vacation home mortgage, a divorce-separation payout settlement…you have to work with those lenders who have those products.
People > Machines
Look, we totally get the appeal of wanting to get a mortgage online. It’s convenient and you don’t have to really talk to a person to get it done.
We're even working to be more efficient with online applications and faster pre-approvals. But, something we noticed in all online mortgage lenders is that no matter what, you need to have a person on that other side helping you through the process.
Will a computer fight on your behalf? Actually…don’t answer that question. Feels a bit too Terminator for us.
No matter what, secure a mortgage that aligns with your financial stability and long-term plans for homeownership. Your home is not just a place to live; it's an investment in your future and your family's well-being.
Comentários