What is an Internet mortgage?
An internet mortgage is a loan requested and administered by a web-based lender. Instead of submitting an application to a loan officer or broker, the applicant works directly with the lender. The qualifications, documents, and processes are the same as for a traditional mortgage, but the rates and fees tend to be lower.
Many Internet companies have their own websites dedicated to receiving and processing quotes and applications. The majority of a borrower’s questions and concerns are addressed in a non-personalized manner on the company’s website. Subscription requests, quotes, and approvals are automated. Generally, the potential borrower has no fees or obligations to complete an application.
If a potential borrower decides to accept a mortgage loan over the Internet, an appraisal fee is required to secure the loan. As with a conventional mortgage, the lender will order an appraisal of the property through an outside seller. The potential borrower has the option of locking in the interest rate in effect at the time the loan is secured or taking the risk of obtaining the rate in effect at the time of closing.
Importance of Internet mortgage
Most Internet mortgage applications are automatically approved by the lender’s computer systems. If there is a problem with the application, a representative of the lender will usually contact the potential borrower to verify that the information is correct and obtain any documents that may affect the decision. Whether the applicant is approved automatically or manually, he is required to present proof of income to the lender.
Since mortgage brokers and loan officers do not need commissions, the interest rates and fees for an Internet loan are usually slightly lower than for a traditional loan. Origination fees and points still apply, but a borrower might be able to save money over the life of the loan due to a lower interest rate. The loan funds are usually transferred directly from the lender to a closing agent and the loan documents are delivered and signed at a property office or through an attorney.
Other websites offer mortgage loans on the Internet to potential borrowers. They direct borrowers to lenders willing to offer direct loans. Some of these sites can allow potential borrowers to compare rates, fees, and loan terms. Refinances, new purchases, residences, and rental properties are all eligible for an Internet mortgage.
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