Best Online Mortgage Lenders of November 2021

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What is an online mortgage lender?

For the past 20 years, if you applied for a mortgage, you had to physically go to a lender’s office. They would give you an application package, which you had to complete and return before your loan could go into processing. You will then receive a list of necessary documents (tax returns, for example) and will need to physically bring them to your lender’s office. Along the way, if anything needs to be changed, you will likely have to take another trip to sign documents.

An online mortgage lender aims to simplify the mortgage process by allowing people to complete the application online. Homebuyers can check rates, submit an application, sign documents, and upload documents without leaving their homes.

How does an online home loan work?

The online mortgage process depends on the lender. For example, some lenders allow you to complete the entire home loan process online from start to finish. (Note: Due to notary requirements, fences usually always take place in person.) Other lenders may allow you to check your mortgage rates online and download documentation. , but you may need to speak with a loan officer over the phone before your application can be processed.

Regardless of the level of online services available, an online mortgage follows the same basic steps in most cases. In general, here are the steps you may encounter.

1. Fill out a simple form and check your interest rates

This is generally called a prequalification, and it involves your lender performing a gentle credit check to check your credit score. This does not include verifying income, employment or assets. Provided you have the lender’s minimum credit score or higher, then you will be able to see which loan products you are eligible for.

2. Decide on the type of mortgage you want

Are you looking for 15 years, 30 years, or something else? Conventional, FHA loan, VA? Select your specificities and officially apply.

3. Submit all documents required by your lender

You will probably be able to do this entirely online. Many lenders will let you connect directly to your bank accounts and other sources to make it as easy as possible.

4. Verification

After you submit your documents to your mortgage company, the lender’s underwriting department will verify them. Once your documentation is verified, you will be allowed to close.

5. Sign and program

Plan your closing and sign your loan documents. This will likely have to take place in person, but many online lenders will send you a notary, so you won’t have to travel.

It should also be noted that if your mortgage is a refinance loan, you will have the additional step of scheduling an appraisal of your home to confirm its value.

This also happens with a purchase mortgage, but it’s more of a behind-the-scenes step (as opposed to bringing an appraiser into the house you live in when refinancing).

How to choose the best mortgage online

The best course of action involves two basic steps.

First, make a short list of online mortgage lenders (say three to five) that meet your needs. We’ll talk about what to look for in the next section, but our pick of the best online lenders listed above is a good place to start.

Once you have your shortlist, get each of them pre-approved, even if they do a credit check to determine your interest rates. The FICO® credit scoring formula is specially designed to allow the purchase of rates without harming your credit score.

You might be surprised at the different loan terms that lenders will offer to the same borrower. The difference can be huge. For example, if you apply for a mortgage of $ 400,000, the difference between the interest rates of 3.125% and 3.25% translates to over $ 10,000 in interest savings over a 30-year period. . You can use a mortgage calculator to compare your monthly payments from each lender.

Tips for comparing lenders online

Start by comparing the interest rates that are offered to you. Here are some other things to consider before applying.

  • Original costs: Some online lenders have little or no set-up fees. Others may charge hundreds or thousands of dollars.
  • Types of loans: Unless you’re looking for a basic conventional mortgage, it’s important to make sure the lender is offering the type of loan you need. For example, if you must use FHA financing, make sure the lender offers it before you apply.
  • Other characteristics: Some lenders may offer discounts for opening additional accounts (like a checking account). Others offer an online process but still have physical branches that you can visit if needed. These are just a few factors to consider, but the point is, you need to choose the right lender for you. your situation.

Pros and Cons of Online Mortgage Lenders

Like most things in life, there are advantages and disadvantages of using online mortgage lenders. Here are some things to consider:

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