What’s an online mortgage?

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Internet mortgages are loans applied for and borrowed through web-based lenders, with lower rates and fees than traditional mortgages. Borrowers work directly with the lender, and most questions and concerns are addressed through the lender’s website. Loan funds are transferred directly to a closing agent, and loan documents are signed at a title office or through an attorney. Some websites allow borrowers to compare loan rates, fees, and terms.

An Internet mortgage is a loan that is applied for and borrowed through a web-based lender. Instead of applying to a loan officer or broker, the applicant works directly with the lender. The qualifications, documents, and processes are the same as a traditional mortgage, but the rates and fees tend to be lower.

There are many Internet mortgage companies that have their own dedicated websites for receiving and processing quotes and applications. Most of a borrower’s questions and concerns are addressed in a non-personalized manner through the company’s website. Subscription requests, quotes and approvals are automated. Generally, no fees or obligations are required from the potential borrower to complete an application.

If a potential borrower decides to accept a home loan online, an appraisal fee is required to guarantee the loan. As with a traditional mortgage, the lender will order an appraisal of the property through a third-party provider. The potential borrower has the option to lock in the interest rate in effect at the time the loan is secured or take the risk of getting the current rate at closing.

Most online mortgage applications are automatically approved by the lender’s computer systems. If there are any problems with the application, a representative from the lender will usually contact the potential borrower to verify that the information is correct and obtain any documentation that may affect the decision. Regardless of whether an applicant is automatically or manually approved, they are required to provide proof of income to the lender.

Due to the fact that there are no commissions for mortgage brokers and loan officers, interest rates and fees for an internet mortgage are generally slightly lower than for a traditional loan. Origination fees and points still apply, but a borrower could save money over the life of the loan due to a lower interest rate. Loan funds are generally transferred directly by the lender to a closing agent, and loan documents are served and signed at a title office or through an attorney.

Other websites provide online home loans to potential borrowers. They direct borrowers to lenders who are willing to offer direct loans. Some of these sites may allow potential borrowers to compare loan rates, fees, and terms. Refinances, new purchases, residences and rental properties are eligible for an online mortgage.

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