The security of online information transmission has never been safer. Consumers, constantly busy, can sit down and fill out information at their leisure, while lenders are able to work without the high overhead of a traditional brick and mortar business.
Why Get a Mortgage Quote Online
Whether you plan on using an online lender or not, getting an online mortgage quote is a convenience that most people cannot pass up. By simply answering a few questions, you can find out exactly how much money a lender will allow you to borrow. From there, just a few quick clicks allows you to look at a mortgage calculator and figure your monthly payments, how much money you would save over the life of the loan by financing for 15 rather than 30 years, or how much a larger down payment would reduce your monthly payment. These are questions that, if you could find the answer to, it was only through a sit-down formal meeting with a loan officer in a bank.
Using an Online Lender for Your Mortgage
Once you have reviewed your rate quote, you are ready to get serious about house hunting. Shopping for a home is the fun part; once you find that home it is back to the numbers game. If you are happy with the quote you received from the online lender, you might consider allowing them to handle your loan.
For many people the concept of an online lender or mortgage broker seems strange, and maybe even fly-by-night. It is important to realize that online lenders and mortgage brokers must be licensed and are regulated just as more traditional lenders and brokers.
If your concerns are more utilitarian, you should know that as soon as your loan closes, it is just like any other mortgage. The main difference is that you never actually go into the bank or office, as you would in for a traditional loan. All information can be transferred by Email, fax, or mail, which is a huge plus to many busy customers.
Once the loan is closed, you can pay by mail, or online, what ever you prefer. Online lending, while a new concept for many, can save you a great deal of time in the long run.
If you are not entirely comfortable with the process of an online lender holding your mortgage, shop around. Many local banks and lender have automated much of their application process. You may be able to stick with a mortgage lender close to home, but still enjoy the benefits of online lending.
Mortgage Rate Quote
Online or In Person Mortgage Rate Quotes
If you receive a mortgage rate quote, either online or from a traditional lending institution, that you have provided personal information to receive, it will be a relatively accurate quote. By providing social security numbers, bank information, tax returns, and employment history, the person figuring your interest rate will have an accurate picture of your creditworthiness.
The rate that you get from this quote would be the rate that you would get from that lender, on that day. Of course, that is where the numbers can lose some accuracy. If you opted for the free online quote for convenience, but plan on going to a traditional, bricks and mortar lender for your loan, you may not get the same rate. Also, even if you use the same lender for your quote and your loan, if there is a change in interest rates between the time of your quote and the time of your purchase, you may find that your mortgage rate changes as well.
Locking in a Rate - get a Quote
If you know what lender you want to use for, locking in a mortgage rate can be the best way to ensure that you know exactly what you will be paying. When you lock in a loan rate, you do all of the paperwork for your loan, you find out what your mortgage rate will be, and you then you lock that rate in. Regardless of what happens to interest rates, you know what your mortgage rate will be.
Now you can take your time to shop for the house of your dreams. Lock-in rates are typically available for at least thirty days, and often, sixty or ninety days. Your lender will let you know exactly how long you have your rate locked in, and what happens if you have not closed on a loan by the ending point of the lock. Typically, you will pay a fee, and your interest rate may change as well. This should not be a problem, as most lenders have generous lock-in terms. Locking in a mortgage rate is a great choice if you want to know exactly what you will spend, and who you plan on using as a lender.
Mortgage Calculators vs Rate Quotes
Mortgage calculators, offer a rough estimate on the amount of home you can afford and what interest rate you should expect to pay. They generally take into account your income, debt, and the length of the loan. Although some may ask about your creditworthiness, it is a general question, and one many people do not know the answer to.
Without the ability to take your credit score, job stability, and other external factors into account, mortgage calculators are not the most accurate way to receive a mortgage rate quote.
Research Mortgage Rates on Internet
Researching mortgage rates on the Internet can be enlightening or frustrating. Choose the former route by learning the key points of online mortgage rates research.
You can find virtually anything you want on the Internet, from a date for the high school reunion to a low rate on your mortgage. In either case, though, you'll need to take steps to ensure that you don't get duped by the old bait-and-switch.
Pitfalls of online mortgage rate research
A Google search for "mortgage rates" returns more than 22 million sites in less than two-tenths of a second. Unfortunately, it could take years to sift through these sites and actually find the information you need. Plus, you run the risk of getting sidetracked by outdated or misleading information. This can be particularly problematic if you base your home buying budget on mortgage rates that turn out to be inaccurate.
Tips and tricks of online research
- Look for rate details. A reliable mortgage rate chart should include a current date and a descriptive title. The description may be as simple as "National Mortgage Rates" or "California Mortgage Rates," but take note of it. Also, be aware that mortgage rate charts generally show averages for prime borrowers and conventional loan structures. The exact rate listed may or may not apply to you.
You should also look for any reference to points in a mortgage rate chart. A point is a fee equal to 1 percent of the funded loan balance; you can pay points upfront in exchange for a lower rate throughout the life of your loan. If a quoted rate has points, the same loan with no points will have a higher rate.
- Pay attention to the professionalism of the website. If the website looks like it hasn't been updated in years, search elsewhere. There are enough reliable, mortgage-related websites out there. You don't need to put your trust in one that looks outdated, or even hokey.
- Know your mortgage types. Rates differ by mortgage type, and each type carries its own risk level for the borrower. A 30-year, fixed-rate structure is the most conservative mortgage because the rate never changes. On the other hand, 3/1 and 5/1 adjustable-rate mortgages (ARMs) may have lower initial rates, but also carry more risk. Having a general idea of how these mortgage types work will help you compare their rates constructively.
Keep a log of the sites you visit, and bookmark those that appear to be the most trustworthy. Rate averages should be similar from one site to another; if one site lists rates that are vastly different, see if you can find out why. Avoid dealing with sites that quote super-low rates just to lure you into a loan application. That's the bait-and-switch, and you don't want to be a fish caught in that net.