In 1999, Freddie Mac hailed it a new era for homebuyers with the release of a paper titled, “Online Mortgage Business Puts Consumers in the Driver’s Seat.” Skip ahead nearly two decades, and look where we stand today. Consumers continue to be somewhat wary of applying for a mortgage from anywhere other than face-to-face with a loan officer. Meanwhile, according to the Pew Research Center, 15 percent of us are willing to trust our romantic relationships to online dating sites. So why all the skepticism over the usefulness, safety and efficacy of online mortgage applications?
A big part of this apprehension has to do with misinformation in the consumer lending marketplace. There has developed a common misperception among homebuyers that online mortgages are somehow less legitimate since they are “only a click away!” The reality of getting your mortgage online is that it still requires a rigorous review process on the part of your loan officer and provider. Actually securing a loan online is no more simplistic than pursuing a traditional (non-online) mortgage. So online or not online? It’s your call. Either way, having a better idea of how the online process works and what’s involved can help to further empower you as you shop for a home.
As a complement to discussing your unique mortgage situation with a financial professional, here are a few ways online mortgage sites can be useful:
- Leverage the Convenience of Connectivity
One of the major benefits that reputable, secure online mortgage platforms offer is their interoperability. Through these portals, you are often able to log in to your personal bank account, payroll provider and other pertinent financial services firms with which you maintain accounts. By providing access to your accounts, you can reduce or eliminate the added step of compiling all of the usual paperwork that typically accompanies a loan application.
- Streamline the Process
An added benefit of reducing the paperwork clutter that often comes with the traditional lending process by inputting your online account information is that you can get a preliminary approval before you begin shopping for a home. This has the advantage of giving you a much clearer price range and an understanding early on of how you will be financing your purchase.
Preliminary approvals are particularly helpful in markets like California and Florida where the National Association of Realtors reports cash offers are more common. By taking this initial step along with working with your loan officer (both online and in-person to line up your financing before you fall in love with a home), you maximize your chances of making the most competitive offer possible.
- Increase the Value of Your Loan Officer Consult
First meetings with loan officers can sometimes feel like a game of 20 questions. It’s not unusual to spend 90 percent of that first discussion just filling out the application, leaving only a few minutes for a substantive review of actual financing strategy as you prepare to enter the housing market. This can be an incredibly daunting experience, especially for first-time homebuyers.
Doing your preliminary research through online mortgage platforms and, where possible, submitting your application and paperwork directly to your loan officer prior to that first session, gives you and the loan officer you are working with a leg up on the process and allows you to focus your time on meaningful discussion of your upcoming home purchase.
At the end of the day, online mortgage platforms are primarily a useful tool for educating would-be homebuyers on their ability to afford a home and what forms of financing they may want to pursue to make their dream home purchase a reality. Insomuch as consumers are comfortable providing access to their personal financial data to these platforms, the mortgage application process can become more efficient. But it’s through an open dialogue with a mortgage officer that Americans continue to feel most secure in their ability to effectively prepare to make it from the open house to closing on a home.