Online mortgages Featured

7:00pm EDT January 30, 2006
If you’re in the market for a home, and the last time you applied for a mortgage was 10 or more years ago, you are in for a pleasant surprise. Back then, you had to manually fill out tedious forms and wait days (if not weeks) to get a reply and close on the loan. But today, with online mortgages, an application can take less than 15 minutes to fill out and can be approved instantly.

While online banking has flourished in the past five years and the majority of mortgage applications are now submitted via the Internet, there are precautions consumers should take before pressing the send button, advises Patti Krajewski, vice president, community lending at MB Financial Bank, a Chicago-based banking and financial services company.

Smart Business spoke with Krajewski about how applying for an online mortgage differs from a traditional mortgage application, and how consumers can ensure they are getting a loan from a reputable company.

 

How do online mortgages differ from traditional mortgages?
The loan itself is identical to a traditional mortgage, but the time and convenience factor are worlds apart. An online applicant can sit down and fill out the forms, lock in a rate and get online approval in 15 minutes or less. All the estimates — down to the monthly payment — can be calculated using any points, and local and state fees.

In fact, the vast majority of lenders today — including banks and other financial institutions — are submitting online mortgage applications, even when the applicant comes into the bank to apply in person.

 

What are the benefits of applying online for a mortgage?
Today there are so many mortgage options, it can be overwhelming. Many online mortgage applications walk you through the process by asking specific questions and, depending on your answers, offering a variety of mortgage options that may fit your needs.

If the process still feels too overwhelming, going to a bank and working with a lender face-to-face to fill out the online mortgage application is a lot like having your own lending expert sitting next to you. It’s much easier for the experienced lender to conduct the interview, help you get through the online application and assist you in making the right choice.

 

What are the downsides of applying for a mortgage online?
Consumers need to exercise caution with online mortgages, just as they do when purchasing anything else on the Internet. There are a lot of mortgage lenders out there and you need to be sure that the company you are dealing with is reputable.

It is tempting to apply to the lowest rate, but take time to shop around before you apply. Remember that the lowest rate doesn’t necessarily mean the lowest annual percentage rate, which is what you really want.

 

How can people make sure that an online mortgage company is legit?
Don’t give an online lender any information until you carefully look into the company. Be careful with mortgage companies that solicit your business through spamming via your e-mail address with too-good-to-be-true offers and rock-bottom rates.

Check out their Web sites and make sure they are not dead sites. You can determine this by looking at the site and making sure the online application page mirrors the company’s main page. You don’t want to be bounced to another Web site.

 

What are some ways an applicant can investigate an online lender?
Investigating an online mortgage company is not much different than looking into any other business. Are they listed in the Yellow Pages? How long have they been in business? Do they have an 800 number where real people answer the phone?

Google them and see what comes up, and remember that just because a company advertises does not mean (it is) reputable. You may also want to check the company out at the FTC’s Web site (www.ftc.gov); if the institution is federally insured, check the FDIC’s Web site (www.fdic.gov). If it’s a credit union, check the National Credit Union Administration site (www.NCUA.gov).

Your best bet when looking for an online mortgage loan is to get a recommendation. Call your local bank, business associate or friend who has recently purchased a home in your area for ideas.

Start locally because, despite the thousands of mortgage rates and products available, the most competitive rates for the property in your community are probably right in your own backyard.

 

 

Patti Krajewski is the vice president, community lending, of MB Financial Bank, a Chicago-based banking and financial services company. Reach Krajewski at (708) 225-3846 or pkrajewski@mbfinancial.com.