What to Know About Getting a Mortgage Online


Getting your mortgage from an online-only lender is one way to get a lower interest rate. These lenders don’t have brick-and-mortar locations, and less overhead means they can afford to offer their customers cheaper rates. This can result in a less expensive monthly payment for you, and you’ll pay less interest for your house. Some online lenders also streamline the process, making it simpler and faster. But before you apply for a mortgage online, there’s a few things you should know.

1.Do your research

It doesn’t matter if an online mortgage company has several commercials or a fancy website, do your research and read reviews to make sure you’re working with a trustworthy company.

It can be hard to distinguish a good mortgage company from a bad one. Reading online reviews is a good start, plus you can check with the Better Business Bureau to see if the company has received any complaints. If you have friends or relatives who’ve recently used an online mortgage company for a purchase or refinance, get recommendations. If they had a positive experience with their mortgage company, you may have a similar experience.

2.Go beyond the pre-qualification

When you visit an online lender’s website, you’re prompted to complete a pre-qualification form. You’ll provide “stated” information about your income, debt and credit health. Based on this information, the company determines whether you’re a desirable candidate. But getting pre-qualified for a mortgage doesn’t guarantee a mortgage approval.

The pre-qualification is the first step. For a better idea of whether you’re eligible, you need to provide the lender with supporting documentation. This includes your most recent tax returns for the past two years, two to three month’s of bank statements and your recent paycheck stub. The underwriter will then review your credit history and issue a formal pre-approval letter if you meet the qualifications.

3.Research products offered by different banks

Online mortgage lenders offer a variety of lending products, so you’re sure to find what you’re looking for. Just about every bank will have a selection of popular products such as an FHA home loan, a conventional home loan and a VA home loan. But some mortgage lenders also have specialty products.

For example, in addition to a 3/1 or a 5/1 ARM, you might find an online lender that offers a 10/1 adjustable-rate mortgage, which lets you enjoy a fixed rate for the first 10 years, and then your rate resets every 10 years. Or you might stumble upon a lender that offers zero down home loans to non-VA and non-USDA eligible applicants, providing these people have excellent credit.

4.Compare interest rates

Not only should you compare different online mortgage lenders to find the right product, you should also shop around and get free no-obligation quotes from different lenders to compare interest rates. Since interest rates vary from lender to lender, plan to speak with at least two or three banks before making a decision. If you only contact one lender, you could end up paying more for your mortgage than necessary.