(Updated January 2015)
The Internet has replaced the dog as man's best friend-especially if that man is a shopper. On the web, you can find countless products and services at low prices. The same online benefits are also enjoyed by homeowners looking for a home refinance.
In its early stages, experts questioned whether a transaction as complicated as a house refinancing could ever occur online. The questions were answered in blazing speed as lenders poured in countless dollars to make online mortgages easy and accessible. In the process, they've created some tangible benefits to online mortgage refinancing-the kind that you can't find when you visit a brick-and-mortar bank.
The entire online refinance mortgage experience seems to take place at light speed compared to the traditional visit to a lender. Instead of scheduling an appointment and driving to a bank, you can instantly visit a lender's website, fill out an application, and get a pre-approval letter in virtually no time flat.
More information, better decision
A solid lender with an effective website can provide all the mortgage information you need. There you'll find instant access to every product, including rates and terms. Most sites also have mortgage calculators to help you determine exactly how much loan you can afford. You can quickly zip around cyberspace to a variety of different lenders and compare rates-without having to make multiple phone calls, or leave your computer.
Time to review
While the overall process goes faster with online refinancing, at the same time it also gives you more time to review your documents and make sure you understand everything before proceeding. All the information about the current status of your mortgage is available through a secure web site, allowing you to review them at your leisure while researching any issues you might be uncertain about.
Online refinancing also provides you with a link to your loan officer so you can readily get answers to any questions you may have during the process. It also provides a way for you to track the progress of your application and quickly identify any new issues that may pop up. If you need to submit additional information, you can quickly do so either online or through email.
Lenders look for you
There are also services that will allow multiple lenders to bid on your mortgage. The websites pull your credit report only once, and then different lenders can give you a bid on the loan. This can result in extremely competitive pricing.
You can also easily make multiple applications to see which will give you the best deal. While you can call around and get quotes from various lenders and compare rates and fees that way, you don't actually see the full package unless you submit an application and receive a Good Faith Estimate detailing the rates, fees and APR.
You shouldn't have to pay to do this, though some lenders will try to get you to agree to lock in a rate prior to issuing a GFE, for which they may charge a fee, sometimes several hundred dollars. And while lenders will individually pull your credit score, the credit scoring agencies will allow your score to be pulled multiple times for the same purpose over a period of several weeks and will still treat it as a single credit inquiry for scoring purposes.
No face-to-face guilt trips
Working online allows you to bypass a potentially awkward situation. If you're working with a lender in a face-to-face situation and you don't like the loan package he's offering, you might feel uneasy about telling the officer that you'll be taking your business elsewhere. The Internet allows you to be as comfortably impersonal as you'd like.
What about closing?
All the steps of closing - the documentation involve and all the signatures needed - can be done and exchanged electronically. There's no actual need to meet face-to-face to sign all the documents, as long as everything is completed.
On the other hand, because closing does involve signing and explaining a lot of documents, the closing for an online refinance may be done in-person. Because your lender may not have an office near you, the closing may be done at the office of the title agency involved, a local attorney or even in your own home. Some people and lenders prefer a face-to-face closing at the end of the process because it helps ensure that all documents are signed and any last-minute questions about the documents can be addressed.
The Internet's robust sites and quick decisions make refinancing a mortgage a pleasant alternative to a face-to-face meeting with a banker. And every day, it seems like there are more improvements in technology to make the process even easier. It appears that the visionaries who once championed the potential benefits of online mortgage refinance were literally right on the money.