Save time and money
by applying for mortgage on Internet
by Robert Heady
Bank Rate Monitor
 The
new wave in mortgages? Applying for your loan on the Internet.
With
a few clicks of your mouse, you can shop the best rates, select the right
type of loan and fill out your entire mortgage application in only about
20 minutes. You can do this anytime day or night when it's convenient, cut
down on paperwork and probably save money in the process.
In
the next year or two, say mortgage experts, the Internet will probably reduce
the time to close on your loan from three to four weeks to just a week or
two.
Futuristic
nonsense? I don't think so. Last year about $10 billion in home mortgages
originated on the Internet, according to Forrester Research. That's less
than 1 percent of the total $1.4 trillion in home loans, but by the year
2003 the figure is expected to jump to nearly 20 percent. When you consider
that 100 million adults are already on the Net, the estimate is reasonable.
What's
driving the trend? "It's the advantage of getting a lot more information
in a short time, and educating yourself on mortgages," says Peter Schott,
vice-president of marketing for mortgage.com, in Plantation, FL, a lender
that just changed its name from First Mortgage Network. "Obviously
an educated consumer has a lot more power over rates and products."
Besides
clicking onto rates for different kinds of loans, a person can check housing
prices and neighborhoods on the Web. "It's the whole shooting match,"
explains Schott.
Bottom
line is the time and money saved. "People now can save money
if they're savvy mortgage shoppers," says Gary Kovner, president of
Home Financing Centers, a Swampscott, MA-based mortgage broker (www.hfci.com)
that places Internet applications with several different lenders throughout
the United States. "In the future it's going to get even cheaper because
more processing costs are being eliminated."
In
some cases, adds Kovner, even home appraisals and other documentation are
being skipped to speed up mortgages. "The consumer can get a loan without
having to talk to a lot of people, or wait on the phone for several minutes
to reach a live person." But don't fret. Internet mortgage deals aren't
entirely impersonal. At Kovner's company and others, within 24 hours after
you submit your loan application on-line a loan officer will phone you to
discuss all your options.
Some
lenders even enable you to track the status of your application on their
Web sites.
But
hey, what about wheeling and dealing with the lender? Doesn't the cold electronic
world rob you of that chance? No, say the expertsyou can still demand that
the mortgage outfit waive or shave certain fees, especially those associated
with the closing. In fact, says Kovner, one out of 10 borrowers already
do that.
Mortgage
rates may be where you'll have the biggest clout. On Feb. 3, mortgage.com's
Web site posted a 6.125 percent rate for a 30-year fixed-rate mortgage,
next to Bank Rate Monitor's national average of 6.625 percent. On a $100,000
loan, that's a difference of $11,653 in total interest cost. On its Web
site, Home Financing Centers shows the latest lowest 30-year, 15-year and
one-year ARM rateseach of which may be offered by a different lender.
The
best part of Internet mortgage shopping is that any sixth-grader can do
it, even if he or she knows zip about home financing. Their hand is held
every step of the way. Most sites are written in plain English, with easy
explanation of the whole processfrom how to choose the right program and
pick a rate, to how to pull up your credit report and fund your loan.
There's
an army of mortgage bankers and brokers to select from on the Net. You'll
even find cooperative groups of lenders bunched together on one site. Interestingly,
of the 20 biggest mortgage names in the country, fewer than 10 seem to up
to speed on on-line transactions. Their sites read like brochures. I suggest
you use Net search engines to scout lender sources, instead of simply jumping
into the arms of the first big outfit that comes along.
A
few tips before you begin:
- Does the state license lenders?
- If so, ask if the outfit has a license.
Also check out the company with the Better Business Bureau.
- If you go through a mortgage broker,
investigate the lender it refers you to. Who's really lending you
the money?
- Use the same shopping smarts as you would
in any mortgage search. In fact, you should also call a local broker and
lender for comparison.
- If you submit personal finance information
on an electronic application, don't include sensitive data such as credit
card numbers. These should be faxed or mailed to the lender.
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 jrn18888@aol.com. |
