Financing in Southport>Question Details

Diane Smith, Home Buyer in Sanford, NC

Online Mortgage Companies

Asked by Diane Smith, Sanford, NC Sun May 9, 2010

I see that there are a lot of online Mortgage companies here on Trulia. Should I apply for a mortgage online (here on Trulia) or deal with a local Mortgage company? I like the idea of doing application, etc. online, however, would I have a better chance for approval and better rate if I use a local bank?

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I'll give you an idea of something that occurred with someone who contacted me back in January. He was buying an apartment for his son in Manhattan. The son did not have enough income to qualify, and the father did not want to go on the loan as anything other than a non-occupant co-borrower. I had someone who was willing to do everything he wanted, even on a condo that did not meet Fannie Mae criteria, new construction with less than 70% sold and owner-occupied. He was recommended to me by a friend who has been a very good client of mine over the last 10 years. He found someone on-line who promised him a lower rate than I could give him. He called me a month ago because the low rate was not the rate he was really going to get, but told me that he needed to close in 2 weeks. I couldn't get it done for him in that time, so told him to just close with that lender. Well, you guessed it, he called a few days ago, he still hadn't closed, is so mad with this on-line mortgage person he found that he is going to close with all cash ($1.5 million apartment) and wants to cash out after closing. The lender that I was going to use for him for a purchase will not cash out to a non-occupant co-borrower. I was finally able to find someone to do the loan for him, but although it is a very good rate, he will have to pay 1 point to get the loan. I think this person learned his lesson, and you can learn something from it too. You don't necessarily have to use a local bank, but you should use a loan officer that is recommended by someone who had success with them.
1 vote Thank Flag Link Sun May 9, 2010
i Diane,

I am a real estate broker and will share a brief summary of the collective feedback and experiences based upon transactions in our office.

Note: The ads that you see here are sometimes for a national company that have offices throughout the country.

While I have seen transactions successfully close when a buyer was using an online mortgage company, we have more often than not, experienced bumps and challenges in the process. I have been directly lied to out-of-state mortgage brokers, and generally find them less customer service orientated. For many of them, their next deal is coming from an online lead. There is a huge incentive for the online loan officer to capture the business, but not always an incentive to remain diligently customer service oriented throughout the transaction. Contrast to a mortgage broker who is building a book of referral and repeat business and you will find a greater incentive to be available and responsive throughout the entire transaction.

I have more often seen a weak or incorrect preapproval or prequal come from an online broker. Tell the "buyer" what they want to hear, but......then, in reality, they don't qualify for that program and are moved into a different loan program with higher costs. By then, the buyer is in a real estate contract and changing mortgage companies is uncommon then. The same can happen with a local loan officer. Sometimes it happens because loan guidelines change; sometimes because the loan rep is inexperienced; and it can also happen with an experienced loan officer who interpreted guidelines differently than the processor or underwriter. It can happen locally. I have seen it happen with greater frequency with online mortgage companies.

We have successfully closed transactions when the buyer used an online mortgage rep and done so without major issues. That seems to be the exception, not the norm. Maybe some online mortgage reps are also working hard to establish their own book of clients.

I am a huge supporter of using the internet to source your prospective service professional, and that includes all facets of real estate and beyond. Once you source a prospective mortgage rep, have a chat with them about their process after the loan documents are signed. How accessible will they be? Do they hand off the loan app to a processor and turn you over to a new contact?

Another source of mortgage reps will be through Realtors or title companies. When a Realtor refers a mortgage rep, ask how many closings they have done with that loan officer and for over what period of time.

Good Luck
1 vote Thank Flag Link Sun May 9, 2010
Deborah Madey, Real Estate Pro in Brick, NJ
My advice is nothing beats a local and trusted mortgage company where you can actually walk in, drop off your financials in person and have a friendly face answer your questions. When dealing with online companies unfortanately you do not know who you are dealing with. The best thing you can do is ask froends, family and neighbors who they used and how their expereince was and use that company. If you dont get any referals, interview a couple of loan officers with simple phone calls or as for a free prequailification and ask what they can offer you and what the costs of the loan will be. good luck with your mortgage.
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1 vote Thank Flag Link Sun May 9, 2010
Since rules, regulations and laws vary by State, your best source of advice on mortgages is any local qualified loan officer(s); visit with a couple and choose the one you like best; see exactly what your budget can handle, check your credit score--their scoring is different--and go from there. Choose your mortgage professional with care.
0 votes Thank Flag Link Sun May 9, 2010
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