Imagine being able to get a loan for hundreds of thousands of dollars, just by typing in a few things on your phone? What if you could get approved for a million-dollar loan at the click of a button on your laptop?
Turns out, many people are looking to online mortgage companies to help their dream of home ownership become a reality. But are online mortgage companies to be trusted? What are the pros and cons of taking such a momentous process online?
We are all busy, and let’s face it, none of us has hours upon hours to call around to a bunch of financial institutions to compare rates. That’s one reason many people are turning to online mortgages—comparing estimates is quick and easy. In addition, some buyers say they’re able to find more competitive rates and lower fees through online lenders. Add to that the fact that online mortgage companies may face less regulation—meaning buyers can get approved and close on a property fast—and online mortgages may seem a very attractive option indeed.
In spite of how attractive online mortgages may appear at first glance, consider the potential drawbacks. First, like any online transaction, it may be difficult if not impossible to find a personalized experience. That means when questions arise—and they always do—you may find yourself stuck like a kite in the company phone tree, or talking with a chatbot. More, if you do call the company directly you might find they have seriously limited hours that just don’t mesh with your work schedule.
But besides service, you may be disappointed by what you find with online mortgage lenders if your transaction is at all complicated. After all, a website can’t know your local market with the same level of expertise as a local lender, and if your loan is complex, say you’re self-employed, have a complex credit history or are applying for an FHA loan, you may be discouraged by the limitations of your online mortgage lender. And you just might find you have more options, flexibility and alternatives with a local lender.
Perhaps most importantly, you want to carefully consider the fact that mortgage lending scams are everywhere online. And the risks are enormous. Online predatory lenders can be found throughout the web, and it can be difficult to tell which are legit and which are going to put you and your future at risk. When it comes to your financial well-being, it’s best to be cautious. Offers that are too good to be true should be suspect, and borrowers would be wise to thoroughly vet an online mortgage lending company before providing any personal information. And if the online lender expects you to pay for pre-approval or a quote, that’s a big red flag.
The convenience of handling our finances online is undeniable, and it’s natural to hope that sort of convenience can be found when you’re shopping for a home. Indeed, technology has made the home buying process easier, and even at the local-lender level, you’ll find much that can be done electronically. With that in-person, local lender process comes peace of mind. If you’re planning to take it all online by securing an online mortgage, do so with great care; your financial future is too important to take risks.