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10 Reasons To Find Your Mortgage Online
It used to be that there was one piece of sure-fire advice for anyone who needed a mortgage: Speak with at least three mortgage lenders before financing or refinancing a home. Today such advice is as useful as typewriter ribbons. The world has changed and one benefit has been the creation of online mortgage listings. So why should you search the Web for your next mortgage? Here are ten reasons why looking for mortgages online makes sense in the Internet era. - You can save money. Financing real estate is a business decision. The reason to prefer one loan over another is that it meets three criteria: It's the best loan for your financial situation; it's the least expensive loan for your situation and the lender can deliver the loan as promised.
Look in the local phone book and you can find lots of lenders, but no local community offers as many mortgage choices at the Internet. Online you'll find the largest possible array of lenders and thus the widest selection of mortgage options. For borrowers, the place to be is where lenders battle for your business -- and that place is online. As to checking with three lenders, why bother when hundreds of lenders can be found in a single online marketplace? - The application process has changed. Applying for a loan used to involve an endless array of forms and files but those days are over. Today lenders can have credit information within minutes and basic loan decisions not much later. Why? Because much of your financial information is already within the credit system. Compare financial information with the standards for individual loan programs and it becomes possible to quickly pick the best loan option from among thousands of possible mortgage choices.
But what about final loan decisions? As much as the lending system has been modernized and automated there are still certain steps which require time whether online or off. For instance, a property must have a certain market value before a loan can be approved, it must be free and clear of all debts and title must be good, marketable and insurable. Determining such information can take time, but appraisals, title searches and similar activities are really forms of consumer protection. As a borrower you want such services otherwise you may be paying too much for a home or buying property with a questionable title -- a title which may make the property difficult to finance, refinance or sell. - You can get pre-qualifying letters from online lenders. One of the most important negotiating tools you can have when buying a home is evidence of financial capacity, the ability to finance a certain amount of borrowing. Lenders call such items "pre-qualifying" or "pre-approval" letters. In general terms, these letters say a lender has looked at your credit, debt and income information and believes you are qualified to borrow so-many dollars. When submitted with a purchase offer, such letters tell sellers that you have at least checked with a lender to determine your financial standing and that you're likely to qualify for the mortgage needed to make the purchase work.
Pre-qualification letters rarely represent a final loan commitment. Why? Because questions other than credit must be resolved before a mortgage can be granted, questions such as such as making sure a property does not have hidden liens and that it has a certain value. There is flexibility with pre-qualification letters. For instance, you can never get a letter showing more borrowing ability than you have, however there are cases where you may want to show less. Example: You want to buy a property which will require a $200,000 loan. If you have a pre-qualifying letter showing you can borrow $250,000 the seller may seek a higher price or tougher terms. In this situation it makes sense to get a letter for $200,000 and not tip your hand. For details, ask individual lenders about pre-qualification policies. - Online calculators can help you find your best options. Mortgage costs used to be a major mystery, but now there are free online calculators that can help you with a variety of financing questions. For instance, how do fixed-rate loans and interest-only financing compare? What's the monthly cost for a $100,000 loan at different interest rates -- or with one interest rate and different principal amounts? Or, how about this: Imagine if you want to retire in 14 years. How much would you have to increase your current mortgage payment to completely pay off the loan?
Online calculators are helpful but they also have limitations. As examples, the "start rate" for a loan may not reflect future interest rates. Adjustable-rate mortgages have interest levels which change. With some loans the monthly payment is not be sufficient to cover interest costs, meaning that the size of the loan and monthly payments can increase. In all cases, check with lenders for specific figures and characteristics. - Education and how-to advice are readily available. Before the Internet it used to be that mortgage lending was a localized information monopoly. Borrowers could contact a few local lenders and maybe get some pamphlets and a few minutes with a loan officer, but finding deeper and more complete information was often difficult.
What can you find online? How about 20 baseline questions to ask when looking for a loan? What about some basic tax information? And what's the best way to handle credit? It's all there -- and more. - The Internet is interactive and responsive. One of the unique characteristics of the Internet is that it represents two-way communication: It's easy to contact lenders without cost via e-mail and through 800 numbers -- addresses and numbers that are instantly available online. In effect, borrowers are no longer limited to a few local lenders, you can contact lenders of every size and in every location from web site information.
No less important, lenders must either respond or lose your business. Never before have consumers had so much leverage in the mortgage marketplace, leverage made possible by the Internet. - It's easy to follow mortgage trends and news online. Internet technology means that entire libraries are available online so that borrowers can find news, information and ideas to help locate the best mortgage products for their needs. This is important because the idea of mortgage shopping is not just to have a large array of choices, but to have an array of choices that can be compared on an informed basis.
- Mortgage information is available anytime, anywhere. Mortgage lending is no longer a 9-5 activity. For any number of reasons -- such as not missing work -- borrowers want access to loan information days, nights and weekends. No less important, borrowers want access from wherever they happen to be, universal access which is only available online.
The demand for access 24/7 requires lenders to respond with online information that's accurate, well-organized and consumer-friendly. Lenders know if they fail to respond quickly that borrowers will go elsewhere. Just like shopping online, with Internet lending you don't have to go to someone's office, fight for parking or make an appointment. The real issue is not so much that you can save money on gas, it's that you have access to numerous lenders if travel is difficult, the weather is bad or you simply prefer to shop at home. - The Internet creates a record of what was said and when. In speaking with various lenders it's sometimes hard to remember who said what and when it was said. One of the great attractions of the Internet is that web pages can be printed out and stuck in a file, and the same is true with e-mail from lenders.
Such print-outs have two values. First, they help borrowers sort through loan options off-line. Second, if there's a dispute regarding programs and terms there's a dated, written record which shows exactly was said, promised or promoted. - The pioneering days are over. Online lending has been tested, tried and established. While done by relatively few people even five years ago, online lending is now routine and accepted. As an example, Mortgage lenders Plus.com has processed loans worth nearly $10 billion -- a figure which grows each day.
The acceptance of online mortgage shopping has impacted the real estate marketplace. Buyers can now go home shopping with a solid of idea of their borrowing ability and the security of knowing where to find the best loan for their circumstances.
Peter G. Miller is a syndicated real estate and personal finance
columnist who appears in more than 90 newspapers. He writes a
bi-monthly column exclusively for Mortgage Lenders Plus.com, an
advertiser supported mortgage directory featuring
home mortgage lenders nationwide for
refinancing, second mortgages, and home loans.
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