Online mortgage programs are becoming increasingly popular — and it's not hard to see why. With an application process that takes less than five minutes, they can almost be thought of as an "express lane" for a loan.
But while some prospective buyers, particularly those who have been through the process before, may appreciate their speed and ease, those same features can feel overwhelming to first-time buyers.
If you're new to house hunting and considering using an online loan program, listen up. I've got the scoop on everything you need to know about online mortgages before signing up. Use this information to help you make an informed decision before you commit to a loan. You won't regret it.
You'll Need to Find the Loan Program That's Right for You
There are so many loan programs out there and each one has its own specifications. Some offer credits for first-time homebuyers, some have more flexible repayment schedules, and some require higher credit scores.
If you're using a traditional mortgage company, your loan rep will be able to provide you with some viable options, based on your current needs and financial history. However, when you apply online, the legwork of finding your best choice is up to you.
Those who will fit into a cookie-cutter program won't have much of an issue, but if you need to get creative with your financing, it may be worth it to bring in a professional who can find you a better deal.
You're Responsible for Reading the Fine Print
Every mortgage comes with clauses. Each loan program must lay out the details of how its rates can change over time, any penalties that you'll face for late payments, and what happens if you need to break the contract early, among other things. As the homebuyer, it's crucial that you understand this information, so that you know what you're in for going forward.
In a standard mortgage set-up, your loan rep will go over all that with you. Since he or she has been through the process many times, they'll be able to confidently explain those terms to you in a way that you understand, and are committed to sticking with you until you get it. With an online mortgage, on the other hand, you won't have that one-on-one support.
If you do go the online route, you should do some research before signing up to make sure that you know what terms and conditions you'll be subject to. You should also be comfortable reading legalese so that you know you can confidently stick to the terms of your loan.
You'll Need to Know What to do if Something Goes Wrong
Obviously, no one wants to think about encountering trouble at the settlement table, but sometimes the unexpected happens and it's best to be prepared.
Most of the time, brick-and-mortar mortgage companies — particularly smaller, local branches — send your loan rep with you to settlement. He or she will often step in and take responsibility for you, if something should go awry with your financing. With online mortgages, however, there is less of a personal touch.
In either scenario, it's important to ask questions before problems arise. Whichever mortgage company you choose, make sure you know their policies for how to handle last-minute issues and that you feel comfortable moving forward with them.