May 26th, 2021 11:06 PM by Jackie A. Graves
There are online mortgage lenders that are becoming an increasingly popular way to get funding to buy a home. You can go through these online lenders and do your entire mortgage application from your computer or tablet. This is different from the traditional way of doing things, where you have to go to a bank and complete your paperwork in person.
There was a recent survey from the financial website NerdWallet that found 64% of millennials would prefer to do the entire mortgage application process digitally.
Online mortgages are incredibly convenient, but as with anything, there are potential downsides to think about too.
Pro: You Can Easily Compare Your Options
You can save money over the life of your home loan if you comparison shop. Going from bank to bank in person doesn’t necessarily make that easy though.
With online mortgages, you can see everything right in front of you as you compare both rates and terms.
Con: It Won’t Work Well If Your Loan Is Complicated
There are situations where your loan may be a little complex to do it all online.
Being self-employed is a good example. You’re likely going to be better off going to a traditional lender in this scenario. You may even have to because an online lender might not work with you if you’re self-employed. If you’re applying for something like a VA or FHA loan, again you might have to go to a conventional mortgage lender.
Having someone locally accessible to you can be helpful and can make the process easier.
Pro: Online Lenders Are Competitive with Their Rates and Fees
The world of online mortgage lending has meant that you might be able to get a better deal. It’s simple to see why. Online lenders don’t have the overhead of brick-and-mortar institutions, so they can pass savings onto their customers in the form of lower fees and interest rates.
If you do the math, you might find that an interest rate that’s just a bit lower is going to end up saving you a lot of money.
Con: You May Not Have a Point Person You Can Contact
Even if your loan is fairly simple and straightforward, you might need help throughout the application process. If you go with an online mortgage lender, there may not be one person in particular you can reach out to with questions or concerns. It may also be harder, in general, to get customer service, whereas if you go to your local bank you can walk in and speak with the same person every time you need anything.
Pro: Online Lenders May Have More Options Available
If you have a unique circumstance, such as a low credit score, or maybe you’re only able to make a down payment of 5-10%, a local lender may not work with you at all. They only have limited options available as far as what they can offer. When you apply online, there are extensive options available to you, so you’re more likely to find something that works for you.
There are even mortgage lenders that specialize in working with borrowers who have low credit scores, while most brick-and-mortar banks require at least a 640-credit score.
Pro: It’s Fast
Finally, the big perk of an online loan is that the process may be much faster than it would be if you went the traditional route. If you go to a brick-and-mortar bank, by the time you get a quote, you’ve probably spent several hours of your day. If you go online, you can fill out multiple applications in an hour and compare them all right away.
There’s no right answer as to which option is better for you. It depends on your financial situation and your preferences, but online mortgages do have both upsides and possible downsides to consider.
Source: Click here