Online home mortgage quotes are very similar to the quotes given by mortgage brokers in “the real world,” except lower. With the reduced cost due to a simplified application process and reduce overhead for office space and personnel, online mortgage lenders can offer financing with no fees or lower interest rates.
Looking At Fees
Fees are the hidden costs of loans. Mortgage brokers are paid in fees or points on the mortgage loan. The advantage of a mortgage broker is that they find the best mortgage rates for you. So even with their fee added into the loan, you still can expect to save money.
Online mortgage brokers have automated much of the mortgage loan process, reducing costs. As a way to stay competitive, many of these lenders have eliminated or reduced their fees.
Interest Rate Quotes
Both traditional and online mortgage brokers can give you an instant generic interest rate quote to narrow your choices from a mortgage lender. However, to get a true quote, you will need to provide detailed personal and financial information. With a traditional mortgage broker, the process can take a couple of days to process the information and meet with the mortgage broker to review rates.
Online mortgage lenders connected all their databases to be able to provide you with a near instant quote. Occasionally there can be delays in processing your information if you have recently moved or changed names or jobs.
Difference Is Sales Styles
Online and traditional mortgage brokers differ in their sales style when relaying quotes to you. A traditional mortgage broker will use sales tactics to pressure you to complete the mortgage application right there. Many people feel the need to make a quick decision rather than taking the time to process the information.
Online mortgage lenders offer a different approach; they provided the information, then wait for you to take the next step. After requesting a mortgage quote, you will receive rates either through the website or through email that you can review at your own pace. You can choose to apply with a specific mortgage lender, or decide that none of them are best for you.
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Mortgage Quotes
When you apply for a mortgage loan you should receive a “Good Faith Estimate” within 3 days of your loan application. This good faith estimate will contain an estimate, but not a guarantee, or your mortgage rate and closing costs.
These are standard forms that you should receive from different lenders. This makes it easier to compare the costs between different lenders.
Comparing Offers
When you compare offer from different lenders you should compare offers for the same type of loan. You can compare a 30 year fixed loan offer from one lender with a 30 year fixed loan from another lender.
You should also try to compare offers made from different lenders made around the same time, if not the same day. This is because interest rates can change every day. A lender may offer a better interest rate only because the day they are making the offer interest rates may have temporarily dipped.
Is The Offer Real?
It is easy for a lender to give you a “lowball” offer. They can leave out many costs in the good faith estimate to make their offer look better than a competitor’s offer.
There are many third party costs on the good faith estimate that usually cannot be avoided. These costs usually include insurance, escrow, title charges, legal fees, taxes, and other fees.
If you get a “no closing cost” option you usually avoid paying the closing costs up front in exchange for a higher interest rate than you would have otherwise received.
Comparing Offers
If a quote is too high you may want to avoid that lender or mortgage broker. There are some lenders and brokers who routinely overcharge their customers. Do not let pressure to close a loan quickly get you stuck with a bad loan.
There are many lenders and brokers out there. You can shop around as much as you like. At most you will need to pay for your credit reports. This is usually less than $50.