Tips for Purchasing a Mortgage Online
Window shopping for online mortgages is a lot easier than actually completing the process electronically. If you have questions, or something goes wrong, the computer can't sit down with you and work it out. Likewise, if you have bad credit, a loan specialist will have to decide if you can qualify for a more expensive sub-prime loan and, if so, which one. Unfortunately, mortgage websites typically don't work well for shoppers with less than top-notch credit.
Before you complete an online mortgage application for a purchase, refinance, or equity loan, consider these tips:
- Get briefed on the mortgage process. Attend a mortgage workshop, seminar, or class or sit down with an informative book or traditional mortgage broker.
- Choose an online broker licensed and regulated by your state. Your state's regulatory agency may be at a loss to handle problems with outside lenders.
- Check out the online lender. The broker finds your loan, but a lender underwrites and finances it. Verify the online lender's status with the Federal Deposit Insurance Corp. (www.fdic.gov) or look for the familiar FDIC logo or the words "Member FDIC" or "FDIC Insured" on the lender's website.
- Compare rates. Shop around using online brokers, "click and mortar" brokers (who are both on and off the Web), and traditional "brick and mortar" brokers and lenders. Get the best rate and terms before you apply. Offline lenders know online lenders can be competitive and they will try to offer you a better deal.
- Don't be taken by the ease of completing applications online. Do your research, complete an application when you've found the loan you want -- and then stick with it. If, for example, you fill out an application at work but don't have Internet access at home, you'll defeat the purpose of the automated online mortgage process.
- Get a rate lock. Online or off, a rate lock -- in writing -- guarantees you a certain rate and terms for a given period of time.
- Consider security issues. It is possible, but not very likely, that someone might steal your online mortgage application information. But it's probably a lot easier to break a window at your mortgage broker's office and ransack the files than it is to hack into a heavily secured online mortgage site.
- Beware of come-ons. Use the same diligence when you shop online as you would shopping elsewhere. The same teaser-rate, bait-and-switch, and small print games that occur offline unfortunately also exist on the Web.