Online Mortgage Loans – Friend or Foe?
Just ten years ago the only way to get a mortgage loan was to drive up to a bank or broker and physically sit in front of someone who’s trying to sell you something. Now the process of getting a mortgage loan can be done from the comfort of your own home, in front of a computer. Yet there are risks and pitfalls associated with online mortgage loans. This article will cover the pros and cons of online mortgage loans, as well as several tips if you should decide to get your mortgage loan through the Internet.
One of the biggest concerns with online mortgage loans is security. How secure is your information? Be sure you can find a physical address for this business before submitting personal information. Never submit your social security number through an online form or application: This should be done over the telephone only.
Check the Better Business Bureau before doing business with any online mortgage lenders.
The next step is identifying who you’re working with. Generally this will fall into three categories: Direct lenders, mortgage brokers, and lead generators.
A direct lender is the lender who is actually originates the loan. Most direct lenders have multiple programs for you to choose from. Direct lenders also tend to be the most secure.
Mortgage brokers specialize in taking your application, and comparing dozens or even hundreds of different banks and institutions, and finally matching up your loan with a lender. While this can be a great service, there is some additional risk: For one, your financial information is being spread all over the Internet without you being able to track it. Another issue is unscrupulous brokers will often try to “add on” unnecessary extras to increase your closing costs and therefore their profits.
Finally, lead generators are just as the name states, companies that specialize in generating leads. They take your information and sell it to mortgage brokers. These are the least secure types of companies to work with, and can also provide tons of hassle in the form of phone calls long after you’ve already purchased your new home. Instead of working with lead generators, research and work with brokers yourself instead.
In short online mortgage loans can be both a blessing and a curse. Do your own research before doing business with anybody online, and be sure to get them on the phone before giving up sensitive information.