For many people, getting a mortgage is the only way buying a home is within reach. Today, there’s no shortage of banks and lenders where you can apply. At the same time, it’s common for these institutions to use online platforms that make it easy to apply for a mortgage from the comfort of your home. Plus, you can avoid dealing with a lot of paperwork and save a lot of time.
On the surface, choosing an online platform to apply for this model of a loan might seem like common sense. Still, there’s some education required on the part of the potential borrower. It’s important to learn more about the entire process, potential risks, and what’s required of you so you can make an informed choice.
For starters, it’s critical that you only work with a reliable party. That’s because there are certain inherent risks associated with sharing your data online. Read on as we go into further detail about the particulars of online mortgages and their safety.
What is an Online Mortgage?
Not too long ago an online mortgage was a home loan from a lender or mortgage broker who had no physical presence. However, with the rise of online lending, even FDIC-insured banks and credit unions with physical branches now make these services available.
You can apply for just about any type of mortgage online, including: conventional loans, FHA loans, VA loans, USDA loans, Jumbo loans, and other specialty loan programs.
A hallmark of these digital mortgages is accessibility, as they can be secured by first-time homebuyers but also those consumers interested in refinancing their existing mortgage loan or leveraging their home equity.
How do Online Mortgages Work?
The online loan application process may differ according to the lender or mortgage broker that you’re working with. However, it’s helpful to know that many online lenders provide many of the same services as brick-and-mortar lenders.
For instance, you can get prequalified and preapproved for a new home loan, request mortgage rate quotes, submit a loan application, and upload financial documentation. Additionally, you can close on your home mortgage and e-sign documents without having to set foot in an office.
Applying for a Mortgage In-Person Vs. Online
It’s easy to see why people are interested in the appeal of online platforms as opposed to having to devote a lot of time and effort with the alternative approach. In fact, it’s estimated that about a third of consumers are already using websites for communication with banks, transfers, and loan applications. The main perk is that the process is streamlined — you can provide the necessary documents online.
An online platform allows you to check your eligibility with ease. Usually, you won’t need to wait for too long to hear back about which type of loan you might qualify for. On the lender’s side, they enjoy lower expenses. That means you can expect lower fees, interest rates, and the like.
Still, there are potential downsides to an online application you should consider. You need to supply important paperwork, such as proof of income. People with a traditional W-2 employment might not run into any trouble. However, those who are self-employed or engage in the gig economy might have a harder time. In these cases, they might be advised to apply via the traditional method to avoid wasting time and experiencing undue frustration.
Some additional food for thought: if there are any questions about your debt or credit score situation in the past, it might be difficult for them to understand without some context. The most important thing is to provide all of the necessary paperwork and be forthright about your past and present financial situation. Additionally, you should never choose a lender only on the basis that you can apply online. Many other factors are more important than this convenience.
Another important distinction between applying online vs. going into an office is that you might miss out on developing a relationship with a lender. If you value personal interaction and the security of knowing who’s taking care of you, find a reputable loan officer in your area. Some people do better knowing they can shake hands with a real person and that someone has their best interest in mind. Also, you may have the opportunity to negotiate a lower rate or qualify with a lower credit score if you already have a point of contact and some rapport established.
Last, your comfort level with technology and sharing sensitive information online is another variable. You’ll need to electronically share information like your Social Security number, education history, and bank account information, which might require granting the lender access.
How to Safely Apply
If you do decide that an online application is the best route for your situation, do so with safety at the forefront. As with any website via which you’re sharing sensitive data, we suggest you review user ratings. Any reputable lender will have a user-friendly platform and software that allows you to communicate with them, share your data, and provide necessary documentation.
Furthermore, keep in mind when researching options for lenders and engaging with them, you might receive emails from different companies who wish to extend you offers. Always confirm the name of the sender and their legitimacy before opening files. Lenders must respond to their clients by using the most current digital technologies used for storing data safely. Fortunately, if you’re working with a reputable lender that has been licensed for some time, there’s little reason to question the safety and security factor.
The Bottom Line
There are many online platforms available. It’s best to do your homework by comparing their requirements and deals with your goals, income, and current credit score.