Should You Use an Online Mortgage Lender When Buying a Home?

Don’t go with an online lender before learning about their pros and cons.

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Life is busy, so of course we want things to be simple. With the internet, we can get fast, efficient, and easy information on our own timelines. We text instead of making phone calls, shop online instead of in stores, and so on. And when someone wants to purchase a home, they begin researching online. 

Many homebuyers feel it’s hugely convenient to use an online mortgage lender, but is it really in your best interest? Is an online option worth forgoing professional advice and service that’s tailored specifically to you? Here are the pros and cons of using online mortgage lenders:

  • Fast pre-approval. These services can be fairly quick in regard to getting you pre-approved, and they can also be cheaper initially. They somewhat dumb down the process, which makes it feel faster, easier, and more convenient—things many people like.
  • Helps people with lower credit scores. They don’t always use the same underwriting as many bigger banks. This means you may be able to qualify, even if your credit score isn’t necessarily great.
  • Increased risk of frauds and scams. You really have to know who you’re dealing with. Though there may be application fees later in the process of securing a loan, you should never have to pay a fee to get an initial pre-approval. Be careful when you’re asked to exchange money.

Only a lender who truly knows your financial situation can get you the best mortgage loan possible.

  • Low credit scores mean high interest rates. Though you may be able to get a loan with bad credit, it doesn’t mean you’ll actually be able to afford a home in the end. Oftentimes, the rates you’ll be getting will be extremely high, and you won’t be able to afford the monthly payments when all is said and done.

One facet is both a pro and a con: Online lenders often have lower interest rates. People love to see low rates, so this pulls people in all the time. Many perceive that a low interest rate equals the best deal, but that’s not always the case. Only a lender who truly knows your financial situation can get you the best mortgage loan possible.

It’s important to get the advice you need, and you simply can’t find it through an online lender. When you can’t qualify for a loan, your local lender can go through your finances and find out exactly what you need to do in order to get pre-approved. And this way, you’ll know exactly what you’re getting into.

If you do go with an online lender, be careful when you fill out the forms. They can be easy to misinterpret, and you want to avoid filling something out incorrectly and having it turn into hidden fees later. 

With a local lender, you can find definitive answers to any and all questions you may have. And since buying a home is one of the largest purchases a person ever makes, it’s important to have the tools and resources necessary for making informed, confident decisions throughout the process. If you have any questions or would like further information, feel free to reach out to us. We look forward to hearing from you soon.

1 comment :

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