Home buyers shopping for loans on the Internet

Internet home loans increasing in popularity

The process of obtaining a home equity loan or mortgage hasn’t changed too much over the years. Traditionally, a buyer would visit a lender, describe the house he or she wanted to buy and then fill out an application for credit. The lender would take the buyer’s financial information and, over time, determine whether or not the buyer had sufficient income or credit to purchase the house in question. Often, especially in small towns, this was a fairly simple procedure, typically utilizing the services of just one lender. 

While the basics of obtaining a home loan haven’t changed, the lending landscape has changed tremendously due to the wide availability of the Internet. Now, instead of simply visiting a local lender, prospective home buyers can shop online with a wide variety of lenders. Most of the time, the lenders aren’t even located in the same state as the buyer. Lenders such as E-loan, Ditech and Quicken Loans due a tremendous volume of business online and buyers can shop and compare loan terms just as easily as they might when shopping for a car or a dishwasher. Once they have determined the lowest available rate, they can obtain a loan from that lender or they can go to someone local to see if they can match the rate.

Some of these online firms have lower overhead than local businesses and can be more competitive in terms of lower closing costs. Some specialize in quick turnarounds; you can often have a loan arranged in less than two weeks. Others may offer a wider variety of mortgage products than local lenders. There are still some traditional issues that cannot be circumvented; some sort of property appraisal must still take place, for instance. This usually involves having an appraiser visit the property in question and make a personal assessment of the value of the property relative to others in the neighborhood.

For those who are opposed to providing personal information over the Internet, most of these companies have representatives on hand who can talk with a customer over the phone when it comes time to providing personal and financial information.  In addition, it is comforting to borrowers to know that they can contact a real human to discuss any problems that may arise during the loan process.

On the whole, the online mortgage business is thriving, and due to its less expensive business model it will probably continue to grow. The introduction of the Internet has been great for such businesses, and it has also been great for borrowers, who now feel as though they have more control over the home buying process. The additional competition has also saved borrowers a great deal of money, especially in rural areas, where they might only have one small lender from which to obtain a loan.

It is doubtful that Internet lending will replace the traditional method of visiting a lender in person. There are always reasons why it may be preferable to do business in person, and some types of loans may simply require it. For many other people, however, the convenience of the Internet has added a whole new dimension to the process of financing a house.