What Should You Know About Online Lenders?

For those of you who are buying a home, you might be tempted to work with an online lender. Here are the pros and cons of doing so.

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We’re so busy these days that a lot of us prefer the simplified version of everything. We’d rather text than call and shop online than go to a store, so it makes sense that the next big trend is to use full-service, online mortgage companies.

However, is that the best decision? Here are some pros and cons when it comes to online mortgages:

Con: There’s an increased risk of fraud and scams. Remember, you never need to pay money for a quote or pre-approval. You may have to pay an application fee later on in the process, but be careful who you’re giving your money to.

Pro: Faster and cheaper. Online lenders generally dumb down the process, which is why they’re so popular. They’re fast, easy, and often offer lower interest rates to attract buyers.

Rates with online lenders can be extremely high.

Con: If you use an online lender, you have to be careful with the online forms. Since there is nobody there to answer your questions, it can be easy to misunderstand the questions and the payments you will be making. It could also affect your approval later on.

Pro: They can usually help people with lower credit scores. You might be able to qualify for a loan with an online lender that you couldn’t qualify for with a big bank.

Con: Although they approve lower credit scores, it doesn’t necessarily mean you can afford to buy a home. Their interest rates can be extremely high. 

One thing an online lender can’t do is give you the same advice that an in-person lender can. That’s why we suggest that all of our clients work with one. A lender can help you improve your credit score, understand your budget, and more. We’d be happy to connect you with a lender that we trust.

If you have any other questions, feel free to reach out via phone or email. We look forward to hearing from you.

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