Is an Online Mortgage Lender Right For Me?

Is an Online Mortgage Lender Right For Me?

It’s not hard to see the attraction of an online mortgage lender. After all, they tend to advertise low rates, fewer fees, and faster pre-approvals than their brick and mortar counterparts.

But is going to an online broker for your mortgage always the smartest move?

As with any lender, there are definite pros and sizable cons to these online mortgage shops. Before you start the process, here are three things to consider:

Pre-Approval

One of the biggest perks of going to an online lender is the promise of instant pre-approval.

But before you flip over your preapproval offer, remember that these numbers are generated by a computer algorithm that considers only broad circumstances, rather than a real person with a more concrete sense of your unique financial situation and the opportunities available to you.

What’s more, the information you enter to get a quote online may not necessarily be the information that your mortgage underwriter will use once you have a contract, which could give you unrealistic – or even totally false – expectations for your actual loan approval. A local loan officer may be better equipped to educate you on all of the ins and outs of the process.

And in this competitive market, having local connections can give you a big leg up when it comes time to negotiate a contract. A letter from a local bank who has a track record of smooth transactions will make the seller and listing agent more comfortable with you. 

As a buyer, when you have loan question at 6 p.m. on Sunday you will be happy that you have a trusted loan officer who you have made a connection with and one who will take your call. - Joel Schaub, Guaranteed Rate

With that said, the time may be coming when "an individual can apply online, submit the required documents and have the money at the closing table all without any offline interaction with the lender," says Joel Schaub, who has been a Vice President of Mortgage Lending for Chicago based Guaranteed Rate since 2005. 

Joel says the ability for some lenders to offer a "same day clear to close" is not far off. "You will see a time in just a few years where a borrower with FICO Score A and Downpayment B is approved for Mortgage C with a very competitive interest rate all in a matter of hours," he says. But for now, Joel doesn't see the role of his employees going away any time soon.

"As a buyer, when you have loan question at 6 p.m. on Sunday you will be happy that you have a trusted loan officer who you have made a connection with and one who will take your call," he says.  

Applying Online Vs. Completing Paperwork

Many homebuyers turn to online companies out of the fear of the mountain of paperwork that comes with a mortgage application. We can see why it may seem easier or more streamlined to give your information online.

But consider this: If you do end up with questions about your online form, will there be anyone there to guide you, besides an unfamiliar voice behind a 1-800 number? Working with a loan officer in your area gives you an ally on the often-confusing road to successfully completing an application and closing your loan. 

Wintrust Mortgage offers the best of both worlds – you are able to complete an online application, upload paperwork to your secure individual client portal while sitting on your couch watching TV at night.  But the big difference is that behind that online client portal is me. - Jennifer Sobocienski, Wintrust Mortgage

Explains Jennifer Sobocienski of Wintrust Mortgage: "Wintrust Mortgage offers the best of both worlds – you are able to complete an online application, upload paperwork to your secure individual client portal while sitting on your couch watching TV at night.  But the big difference is that behind that online client portal is me. I am an experienced loan officer that will look over your application and ask questions if clarification is needed. The client portal gives you the option to upload paperwork for me to review, this allows me to analyze your situation much like an underwriter would. And after I review everything I follow up with a phone call to discuss the next steps. I am your dedicated loan officer from start to finish, unlike calling a 1-800 number and talking to a different person each time."

Interest Rates and Fees

Online lenders do tend to present lower fees and interest rates, but it’s important to remember that there many variables impacting your rate, and that a lot of that lower cost comes from not having experienced professionals on-hand to help you out, day or night. And while online lenders may look more financially appealing on paper, having a knowledgeable, loyal partner can lead to the sorts of insightful recommendations and plentiful options that can end up saving you more money in the long run.

“Using a local lender will helps ensure a smooth process from start to finish," Jennifer says. "I have people come to me after starting with an internet lender because they find out quickly that they don’t understand the local market or real estate practices - jeopardizing their purchase. There are potential financial costs and risks with not meeting the negotiated contract causing unnecessary stress."

We know that applying for your mortgage can be a daunting task. While we recommend consulting with a trusted local lender, it’s important to find the process that works for you and your family.

Whether you’re looking to buy or sell a Chicago home or you’re looking for recommendations on lenders, Real Group is here to help! Drop us a line whenever you’re looking for a trustworthy guide on the road to homeownership.

Contributing Lenders quoted in this article
Jennifer Sobocienski Witrust Mortgage 
Jennifer Sobocienski
Wintrust Mortgage
Senior Mortgage Consultant
(773) 303-0274
This email address is being protected from spambots. You need JavaScript enabled to view it.
Website

Jennifer Sobocienski, Senior Mortgage Consultant - NMLS #755995
Wintrust Mortgage, a division of Barrington Bank & Trust Company, N.A.,
a Wintrust Community Bank, NMLS #449042. Equal Housing Lender.

 
Joel Schaub Guaranteed Rate 
Joel Schaub
Guaranteed Rate
Vice President of Mortgage Lending
(773) 654-2049
This email address is being protected from spambots. You need JavaScript enabled to view it.
Website

Joel Schaub, Vice President of Mortgage Lending - NMLS #224512
NMLS ID 2611 | NMLS Consumer Access | Equal Housing Lender
Licensing Information: https://www.guaranteedrate.com/licensing 

 

 

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