If you plan to buy a home in Albuquerque soon, no doubt you’ve already started shopping for lenders. A growing number of online mortgage lenders are becoming increasingly popular ways for people to secure funding for the purchase of a home. You can apply for a mortgage on these online lenders from your computer or device. The process is different from the traditional one, where you have to go to a bank and fill out the paperwork in person.
According to a recent survey from the financial website NerdWallet, 64% of millennials prefer to do the entire mortgage application online.
Although online mortgages are convenient, there are also potential downsides to consider.
Pro: Easily Compare Your Options
If you compare home loan rates, you might be able to save money over time. However, going to several banks in person is not the best way to do it.
Online mortgages provide easy comparison of rates and terms, so you can recognize which is best for you.
Con: It Won’t Work Well If Your Loan Is Complicated
There are some instances where it may be too complicated to handle your loan entirely online.
As an example, if you are self-employed, you are likely to be better off getting a loan from a traditional lender. If you are self-employed an online lender might not work with you. If you are applying for an FHA or VA loan you might have to find a conventional mortgage lender.
If you are able to reach someone locally, the process can be easier.
Pro: Competitive Rates and Fees
There is no question that online mortgage lenders can offer you a better deal. This is because they don’t have the overhead of traditional lenders. They can pass those savings onto their clients in the form of lower fees and interest rates.
If you do the math, you might find that an interest rate that’s just a bit lower is going to end up saving you a lot of money.
Con: No Specific Person You Can Contact
When you apply for a loan, even if the process looks straightforward, you might need help. If you choose an online lender, you may not be able to reach out to a specific person whenever you have questions. Additionally, customer service could be a challenge, whereas at your local bank, you can walk in and speak to the same person every time you need anything.
Pro: More Options
Depending on the circumstances, such as your credit score or your ability to put down a down payment of 5-10%, a local lender may refuse to work with you. They only have limited options available to them. You have more options when applying online, so you’re more likely to find something that works for you.
Most brick-and-mortar banks require at least a 640 credit score for mortgages, while there are mortgage lenders that specialize in borrowers with low credit scores.
Pro: It’s Fast
Finally, online loans allow you to accelerate the process compared to going the traditional route. If you go to a bank, you will probably be waiting several hours for a quote. If you go online, you can fill out multiple applications in an hour and compare them all right away.
You need to consider your financial situation and your preferences when determining which mortgage option is best for you.
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