If you’re applying for a mortgage online, getting approved will be as easy as signing your name. Many banks and lenders have online application forms that you can fill out from the comfort of your own home or while on the go with your smartphone or tablet. To get approved, you’ll submit basic information about yourself and your financial history, along with the size of the loan you need and how long you plan to keep it.
Some lenders will also allow you to download their pre-approved applications so that you can fill them out ahead of time, saving you some precious time when it comes time to apply.
Finding the right mortgage lender can be tricky though, especially if you’re trying to get a loan online. The internet provides borrowers with more options than ever before, and because of this, there are more scams than ever as well.
The mortgage industry is being shaken up by online-only lenders. These non-banks are offering loans at competitive rates and with convenient fees. It puts them in direct competition with banks. Non-banks aren’t subject to as many regulations as their banking competitors, so they can keep costs down by foregoing extra offices and staff. It allows non-banks to offer fixed-rate mortgages at a lower cost than traditional lenders—and they also offer more flexible loan terms than banks that specialize in real estate loans.
That’s why lenders in most states turn to third-party vendors when they’re looking for online lenders. For a fee, these sites provide access to loan providers and help close loans quickly — no in-person meetings required.
Reasons to Consider Mortgage Online
With traditional mortgage lenders, it can take months for you to get approved for a home loan. If you’re in a hurry and have an above-average credit score, then a mortgage online might be your best bet. The approval process is streamlined, so if you’ve got good credit, you could have your loan in as little as three weeks. Even better: You can apply through many sites without leaving your home! This is why thousands of consumers are taking advantage of mortgage online lending every year.
There are several affordable homes for sale that accept mortgages from lenders. If you’re already thinking about buying a new house, just consider how convenient it would be to streamline your financial process with an online lender.
Cons of Applying for A Mortgage Online
It’s easy for a borrower to misstate their financial history and information. Borrowers are often in a rush when they fill out online applications and aren’t likely to carefully read through each section. It can lead to common mistakes, such as entering incorrect income or asset values, which could result in a denial of loan eligibility or worse, an ineligible loan with high rates that may not be easily fixed.
Self-employed borrowers may not have time or inclination to comb through their financial data in a thorough and organized way. They may not be able to determine, for example, which of their expenses they can or cannot count as deductible business expenses. This lack of organization could result in a miscalculation of income, making them appear less creditworthy than they are.
Choose an Online Lender
When you choose a lender, make sure they are licensed and operate within your state’s laws. If you plan on using FHA financing, check with your city and state to make sure that any lender you choose is approved by them as well. Your best bet is a company that offers several loan options and lets you pre-qualify before getting an offer in writing.
Choose the Right Loan Type
You’ll have several loan types from which to choose, but keep in mind that for any given lender, a particular type of loan may be subject to higher or lower interest rates. For example, fixed-rate loans are typically considered safer for lenders than variable-rate loans. But if you think interest rates are likely to rise soon especially if you plan on selling in five years or less, consider a variable-rate loan.
Prepare Your Documents
Before applying for a mortgage online, get together all of your documents: bank statements, credit card statements, pay stubs, and other records of income. It’s better to have them organized before you start your application so that you can focus on submitting accurate information promptly.
The good news is that it is easier than ever for first-time homebuyers and people with poor credit to get a mortgage online. And as you’ve seen in our review, many of these lenders also offer lower interest rates and better customer service than banks and other traditional mortgage lenders. So, get started today by getting pre-approved.