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Applying
for on-line mortgage is easier than you might think
By Robert K. Heady
 Ever thought about getting a new mortgage or refinancing
through the Internet?
Don't get antsy about not being able to do business
eyeball-to-eyeball with a local mortgage lender. The online process
is "incredibly simple," says consumer borrower Thomas
B., a commodities trader in Jupiter, FL.
Sensing that mortgage rates were about to rise
earlier this year, he and his wife, Patty, submitted a maximum
online mortgage bid of 8 percent through priceline.com, the same
outfit that's made a big splash by allowing you to bid on airline
tickets and hotel rooms. Because they had recently saved 60 percent
on emergency round-trip airline tickets from the same company,
the couple thought they'd also give their mortgage application
a shot.
"They called me back in less than one hour
and accepted our bid," Thomas reported. "'Based on
everything you've told us, you're approved,' they said."
"You must be joking," he told the lender,
one of several working with priceline.com
"No," the lender replied. "We can
even do better. Your rate will be 7-5/8 percent."
Tom and Patty's mortgage loan sailed through with
no sweat, including appraisal and credit check. "Of all
the big things you do in life, like getting a mortgage, this
was the easiest thing times 10," he said.
The online mortgage business is explodingfrom less
than $500 million in 1998 to a predicted $40 billion by the year
2001, according to Forrester Research, Cambridge, Mass. Besides
www.priceline.com, other major players and their Web addresses
include www.mortgage.com, www.quickenmortgage.com, www.eloan.com,
and www.iown.com (formerly www.homeshark.com).
Some, like mortgage.com, make their own loans.
Others, such as priceline.com, work with multiple lenders.
The easy-to-read information on their Web sites
reads like a crash course in the mortgage business. You're virtually
taken by the hand and guided through the entire application maze,
step by step. You choose the type of mortgage you want, determine
how much house you can afford, see your monthly payment to the
penny, and get a slew of helpful hints.
But online mortgage buying is not as simple as
"just getting a generic rate quote," cautions Ben Ness,
senior vice president for financial services at priceline.com's
headquarters in Stamford, CT. "You need to get rate information
that's specific to you, such as your geographic location
and your credit history.
"And you need to understand what both you
and the lender are committing tofor example, the lock-in period."
Online lenders advise consumers to "do their
research first," by sampling rates and points published
in their local newspaper, then shopping several Web sites and
comparing information.
How can you make sure you don't screw up? "Here
are the three biggest tips," counsels Garth Graham, a senior
vice president at mortgage.com's home base in Plantation, FL:
"Understand the three components of mortgage costrate, points
and fees. Know what you and the lender are supposed to do, and
learn the provisions of lock-in periods."
A point is one-hundredth of the loan amount (e.g.,
one point on a $100,000 loan is $1,000). There are upfront fees,
such as for appraisal and credit check, and closing fees including
the points.
The lender wires your mortgage funs to a local
title company, to be paid at closingjust like with regular mortgages.
Customer service is a big issue with online loans,
observes Ginny Cain, spokesperson for mortgage.com in Walnut
Creek, CA. "This is still a `high-touch' industry, which
is why we have several hundred people at our call center, following
up online mortgage applications.
Bad credit history? Online lenders have special
"sub-prime" lending facilities to accommodate risky
borrowers, although at higher rates.
Some Internet mortgage peddlers don't stop at new
and refinancing mortgages. E-Loan will finance your car, cash
out your home's equity, and let you apply for a credit card.
Quickenmortgage.com enables you to check the latest
home listings, market by market across the country, and will
even direct you to home improvement companies that will remodel
your kitchen or repair your gutters and downspouts. Meanwhile,
don't be afraid to try to obtain a mortgage online. You have
nothing to lose by at least checking it out.
Ask Gloria C. of Birmingham, AL, who just got her
mortgage through mortgage.com. Over a two-hour period during
one recent Saturday morning, she and the company's case manager
were on the phone and also e-mailing each other at the same time.
By the time the call ended, Gloria's application had been approved.
Editor's Note:
Robert K. Heady is the founding publisher of Bank Rate Monitor
and is the co-author of the book, "The Complete Idiot's
Guide to Managing Your Money." You can write to him in care
of The Bull & Bear or send e-mail to jrnl8888@aol.com.
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