WWW = Who, Where & Why
The World Wide Web, or internet as most of us call it, drives our everyday lives in so many ways. Sadly it's safe to say that life as we know it would be difficult without it.
Those who are aged 50+ have somehow managed to make it through half their life without the internet. This group was still able to research information, find their way to destinations, book travel reservations, shop for needless gadgets and get groceries. And, yes, there was even the luxury of meeting people and dating when your true colors usually showed much more quickly. For those who are under 25, much of their life was developed through the internet.
Real estate and mortgage lending also existed before the internet; but today, like many industries, both would most likely struggle to survive without it.
The technology of the internet provides consumers access to a wealth of information and resources that can often spawn both favorable and unfavorable results.
From the mortgage lending perspective, online lenders can be a dime-a-dozen and generally have one main focal point -- marketing. They market for your attention, often through teaser interest rates or some other catchy gimmick or name. Service is rarely their top priority because they are more about quantity than quality.
Although online lenders may try to capture a consumer with something in their bag of tricks, it can often end up being more costly to the consumer, especially if a deal is delayed or falls apart due to inefficiencies.
Many real estate agents have expressed their discontent working with buyers who have a pre-approval from an online mortgage lender. Although some online lenders could certainly be reputable, listing agents are often hesitant accepting an offer from a buyer with an online lender due to the increased potential risk of fallout.
Some specific factors of an online lender that borrowers may want to consider include the following:
- When conducting any type of business via the internet, there can be an increased risk of fraud, scams and illegal business practices because of not knowing who you are dealing with. Many of us have seen those official looking emails from banks or online retailers asking us to click the link to verify our account or change our password. Some may be legitimate, some are not.
- The "loan officer" could be anywhere in the country and may not be familiar with or an expert in the local area market. In many cases a local expert will have the knowledge to provide a buyer with their best financing options.
- The virtual loan officer may not be available when needed or may be difficult to contact. Most local loan officers provide their direct contact information, usually a cellphone number. They are generally available whenever buyers need them or at least have a local team member to back them up.
- Some online lenders want to capture a credit card for an upfront fee for an application, appraisal, credit check or other expenses. Although they technically shouldn't charge any fees without providing proper disclosures to clients, they often do this to gain commitment from the buyer. Most local lenders will not charge anything up front and will only charge buyer-applicable fees when they find a property to purchase.
- It's very common for online lenders to advertise very low rates to entice you to fill out an application. Once they get a full application, run credit and get the process started, they will tell you that advertised rate is not available to you. Most local lenders will request that you complete a full application and collect necessary documents to verify your information before quoting you an interest rate. This allows the local lender to provide you with a more realistic rate that you qualify for based on your credit history and income, rather than a teaser rate from an online lender to suck you in.
- Online applications can sometimes be difficult to understand, and it may be tough to have your questions answered by calling a 1-800 number. Most local mortgage lenders can meet with you face-to-face if you so choose or have a personal conversation with you over the phone to ensure you know what is being asked and why. And they can immediately address any questions or concerns that you may have.
- The loan process can sometimes offer challenges depending on a variety of factors, including the property appraisal, home inspections that can impact your mortgage and who knows what else. An online lender may require you to call a 1-800 number or call center that has limited business hours and is closed for the weekend or holiday. Most local loan officers will provide you with their personal phone number -- usually their cellphone -- and you can often call, text or email them at virtually anytime day or night and even on the weekends.
- Service with a smile. Being able to work with a mortgage professional who can sit across the table from you builds rapport, trust and confidence in the entire mortgage process. Most importantly, it provides the human element so you know that individual is working in your best interest to get your mortgage financing done, and you can look forward to moving day into your new home.
The internet is indeed a valuable tool that enhances our everyday life in many ways. But when it comes to mortgage lending for the largest purchase of your life, know Who you're talking to, Where they are located and Why they will ensure a smooth financial transaction from contract to close.
Dan Rank
Mortgage Loan Officer NMLS #140989
HomeSale Mortgage, LLC NMLS #1054689
Direct: 717.271.2400 efax: 866-849-4320
dan.ranck@homesalemortgage.com www.danranck.com
Facts, opinions and information expressed in the Blog represent the work of the author and are believed to be accurate, but are not guaranteed. The Lancaster County Association of Realtors is not liable for any potential errors, omissions or outdated information. If errors are noted within a post, please notify the Association. Posts represent the author's opinion and are not necessarily the opinion of the Association.
