The internet has made many things easier for the consumer. Just think about it-if you want to find a particular item at your favorite department store you can browse online to see if they have it and then order it and have it sent to your doorstep. Pretty convenient. The internet has made shopping for a home easier as well. You can look at pictures on line, get neighborhood crime statistics, find evaluations of school systems etc.all the data at your fingertips. This enables you to be a much more prepared shopper when you do make the phone call to your Realtor to actually get inside the homes that you think you would like.
But what about mortgage lending? Most lenders have websites that you can access to give pertinent data in order to obtain a pre-approval. When you look at different website offerings for lending do you really know what the offer is? How much do you know about various loan programs, the differences between them, and what makes one lender more desirable than another?
Gen X'ers and Millenials have grown up with internet access and are very comfortable navigating through cyberspace to find what they want. But in order to find what you want you have to not only know what you want, but what you are actually able to obtain. Mortgage loan products aren't quite the same as finding the best price on a pair of Nike running shoes.
Generally speaking I won't compete with internet interest rates. The fine print can hurt you. If you don't know what you are comparing then you don't know what you are buying. Interest rates may differ depending on location but overall there isn't a lot of variation-maybe an eighth to a quarter of a point on any given day on identical products. If you run across a rate that is significantly different than what I or other local lenders is quoting something's up. The old adage "if it sounds to good to be true, it is" definitely applies to comparing interest rates.
The last time I had someone call to ask me to match an online rate I went to the website myself to see what he was asking me to match. The buyer wanted a 30 year fixed rate conventional mortgage. What he was looking at was a fifteen year fixed rate with a discount point attached to the pricing to bring the interest rate lower. Not what he wanted, nor what he was qualified to pay for.
Individual issues that affects interest rates are:
1) credit score
2) Down payment amount
3)Loan type
4) Loan amount
In addition if the loan is for a refinance, whether or not a borrower takes cash out of the transaction to pay off bills will make a difference to the rate as well.
There is an another issue with internet mortgages and that is knowing who it is you are dealing with. There are large companies such as Bank of America, Wells Fargo and JP Morgan Chase that are certainly reputable, but it is difficult to find accountability. Do you want to speak with the same person twice? What about if you run into an appraisal problem-how does that get resolved? When you use online lending sources you may be losing your ability to have any control over the tracking your own loan. Not knowing where you are in the process or the ability to find out who does, can kill a real estate deal. You could lose the house you love. The stakes are high.
Wouldn't you rather be able to sit down face to face if there is a problem or concern about your loan? Wouldn't you rather have someone that you can ask about what the fees mean or the lending terms if you are unfamiliar with them? What about the process? Even if you are a veteran of buying homes, if you haven't obtained a new mortgage in the past few years you will find that things have radically changed. Personally I think accountability is worth something. I hope you do too.
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