5 Things to Know About Online Mortgages
As lenders have rapidly entered the digital realm, it has become increasingly common for some home buyers (particularly those buying their first home) to seek out mortgages online. This trend, and buyer experiences associated with it, is mostly positive. It provides for additional borrowing options, all available at a borrower’s fingertips. However, it also opens the door for potentially rushed or uninformed decision making, which could result in borrowers not being unable to successfully close the purchase, being at risk of defaulting, getting stuck in litigation, and/or losing the house and even their deposit. To prevent this from happening, we’ve outlined some key things you should know before getting a mortgage from an online lender.
What to Expect
It is possible that with an online lender you can expect some efficiencies in the qualifying process. The goal of new technology is to make the process easier to understand and less cumbersome to carry out. Speed can also be a factor that determines your position for purchasing, as the online process may allow for faster approval, thus reducing time and competition with other bidders. However, timing for producing financial documentation to qualify, get approved, and close will still be up to the borrower to complete in a timely manner.
When choosing an online mortgage lender (or any lender) make sure you know all your options. It is important to confirm that the lender is considering all factors when presenting the best options for you before making a final decision. For example, were you asked whether you are a salaried, hourly or commission-based employee? Did he or she question the length of time you have been at your current job, or what field or profession you work in? These and many more details can make all the difference, so be sure that all aspects have been considered.
Make the Lenders Earn Your Trust
If federally regulated forms aren’t included, such as the Loan Estimate and Closing Disclosure forms, don’t take chance here. It’s also important that a lender’s processes are totally transparent. In October of 2015, the TILA-RESPA Integrated Disclosure (TRID) rule was implemented to require all lenders to include all the specifics of the mortgage, and provide enough time for the borrowers to review and discuss these terms before closing on a home. If a lender is rushing you for a decision and not complying with this requirement, that should immediately raise a red flag.
Go With Your Gut
Whether you prefer a lender that is exclusively online, or a traditional mortgage broker or banker, it’s important to feel comfortable with the person you are dealing with. Likewise, it is also advisable that the lender be vetted by your real estate professional. If putting your personal information online isn’t for you, find a mortgage professional you can meet with face to face or that has been recommended by your real estate professional. Reputable lenders will of course offer this as an option, so don’t hesitate to ask. When it comes time to purchase, the most important thing is that you feel comfortable with all borrowing terms and conditions and are confident with the creditor before signing anything. Ask any and all questions necessary, consult your real estate professional, and go with the option that feels right for you.
If you’re looking for a home or have been pre-approved for a mortgage, we are here to guide you through the entire home buying process. Contact your South Florida real estate family today to learn more.