Did you know you could shop around for a mortgage? Many homebuyers don’t realize that they have choices when it comes to lenders. In fact, shopping around can save you some serious cash. Right now, one of the best ways to shop around for a mortgage is to check out all the online lenders. But is an online mortgage lender right for you? Let’s take a look at the pros and cons.
Pro – It’s less time consuming
Applying for a mortgage can be a very time-consuming process. It can take days or even weeks to gather all the paperwork you need to apply. Applying for a mortgage online can save you a significant amount of time. Applications are generally easier to navigate and you can upload your documents directly to the website. You are able to sign documents digitally and avoid delays because of missing paperwork.
Con – It can be more difficult to get help
When you apply for a mortgage at a local bank, you have a person right there in front of you. It’s easy to ask questions when you’re face to face or only a phone call away. But when you’re applying for a mortgage online, it may be more difficult to get help. It may take time to get someone on the phone to answer your questions about the application process. And if you misinterpret a question on the application, it could result in higher fees or even your inability to get approved.
Pro – You may find lower rates and fees
Brick-and-mortar lenders have more overhead than online lenders. For this reason, online lenders may be able to pass those savings to you. You may qualify for lower rates and fees than you would with a brick-and-mortar lender. While your rate may only be a quarter percentage lower, that could mean significant savings over time.
Con – Rates are not guaranteed
While you may be enticed by the lower rates and fees, be aware that these are not guaranteed. You could be several weeks into the mortgage application process before you discover that you are not eligible for the reduced rate. If you back out, then you’ll lose valuable time. If you don’t back out, then you may find out that you’re paying much more than you originally anticipated.
Pro – Online lenders have more options
When you walk into a bank or credit union, they are going to have a limited number of loan products that they can offer to you. In some cases, you may not be able to apply for an FHA loan or a VA loan. When you work with an online lender, you’ll find more options that may not be offered by brick-and-mortar lenders.
Con – Beware of hidden fees
Online lenders stay competitive by offering consumers great deals. But be aware that those great deals often come with a lot of fine print. Closing costs can add considerably to what you’re paying for your home. Make sure to read the find print of any online loan and ask questions so that you know exactly what to expect at closing.