How to Apply Online for a Mortgage
by Brandon Cornett
The Internet has transformed many
aspects of the real estate and mortgage
loan industries. These days, you
can take virtual tours of homes,
track property listings online, and
even apply online for a mortgage
Consumer empowerment is always a
good thing. But there are certain
things you need to know before you
apply online for a home mortgage
loan. By researching the online loan
process before venturing into it,
you will be better prepared to take
the right steps toward success.
Applying for a Mortgage Loan
It's important to note that the
mortgage application process varies
from one borrower to the next. Your
process, for example, will be influenced
by the amount you're trying to borrow,
your credit history, your debt-to-income
ratio and other factors. With that
said, here's how the basic process
works when you apply online for a
mortgage / home loan.
1. Review your credit report.
2. Determine your mortgage budget.
3. Make a list of online lenders.
4. Provide basic information at first.
5. Compare the interest rates offered.
6. Compare other elements of the loan.
7. Get everything in writing!
1. Review Your Credit Report
When applying for a mortgage loan,
this should always be one of the
first steps you take. You can be
sure that mortgage lenders will review
your credit report and credit score
(two different things) with a fine-tooth
comb, so it makes sense for you to
review these things first. Make sure
your credit report doesn't have any
errors or discrepancies. If it does,
submit a correction request to the
company with the erroneous report
-- either Equifax, TransUnion or
2. Determine Your Mortgage Budget
Before you apply
online for a mortgage / home loan,
you need to know how
much of a mortgage loan you can afford.
Don't rely on the lender to tell
you where your budget lies. You need
to determine that for yourself. When
a mortgage lender approves or disapproves
a loan, they do so based on credit
scores, risk factors, and other data-driven
elements. They do not consider how
the loan will affect your quality
of life ... so that's your job. Use
an online mortgage calculator to
reduce a hypothetical sales price
down to its monthly payments. This
will help you determine where your
mortgage "comfort zone" lies.
3. Make a List of Online Mortgage
Once you've completed the self-assessment
process outlined above, you are ready
to create a list of lenders that
offer online mortgage application.
These companies can be loosely categorized
in one of two ways -- they will either
be (A) traditional mortgage lenders
with an online application tool,
or (B) a web-based lender who specializes
in the online mortgage process. Examples
of the latter include E-Loan, Ditech
and Quicken Loans.
As a rule of thumb,
stick with the online mortgage
lenders who have
been around a while, and those who
have a strong reputation (like the
three mentioned above). This is primarily
for information security purposes.
Empowered by the anonymity of the
Internet, some unethical "lenders" seek
to take advantage of consumers through
their online application tools. This
can lead to identity theft, among
Before you apply online for a home
mortgage loan, always make sure you
are using a trusted, well-known mortgage
company. It's also a good idea to
look for a VeriSign or e-Trust logo
/ link on their site. This will give
you even more comfort by knowing
the website has been reviewed by
a company specializing in online
4. Only Provide Basic Information
Most online mortgage lenders will
only ask you for some preliminary
information regarding your income,
debt, etc. They do this so for basic
screening purposes -- they want to
make sure you're somewhat qualified
for a mortgage loan before taking
the time to review a full application.
This is good for you too. By providing
only basic information up front,
you can find out if the lender is
even willing to work with you. In
this way, you can avoid filling out
a full mortgage application for a
company who cannot help you. This
will also limit the number of credit
inquires made by lenders. If you
have too many credit inquires (by
frequently applying online for a
mortgage, for example), it can send
a red flag to other lenders that
you're having trouble being approved.
5. Compare Interest Rates Offered
The interest rate
is one of the key elements that
mortgage amount you'll pay each month.
So it should also be a key decision-making
factor when you apply online for
a mortgage / home loan. Many times,
online lenders can offer better interest
rates than traditional "bricks-and-mortar" lenders.
Companies like E-Loan and Ditech
have become extremely efficient at
the online mortgage process. This
obviously limits face-to-face time,
paperwork, and other factors that
can increase the lender's overhead.
The world of online mortgages is
a highly competitive one. If you
have decent credit and are generally
a good candidate for a mortgage,
online lenders will try to offer
you the lowest rate and best terms
possible, in order to get your business.
Keep this mind when applying online
for a mortgage.
6. Compare Other Elements of
Interest is only
one part of the mortgage picture.
So when comparing
online lenders, be sure to ask about
closing costs, prepayment penalties,
and other aspects of the "fine print." For
an excellent article on comparing
mortgage lenders, click here.
7. Get Everything in Writing
When you apply online for a home
loan, it's absolutely critical that
you get everything in writing. This
is good financial practice in general,
but it's especially important with
large financial transactions such
as mortgage loans. For example, if
a lender promises you a certain interest
rate based on your qualification
and credit score, ask them where
it says that in writing.
Lenders are required to provide
you with this information within
a day or two of your mortgage application.
This is a basic requirement of the
Real Estate Settlement Procedures
Act, or RESPA.
We hope you have enjoyed this guide to online mortgage loans. Elsewhere on
this website, you can learn more about the types of mortgage loans, information
about your credit report, and other topics related to home buying and mortgages.
About the Author: Brandon
Cornett publishes the Mortgage
Refinancing Blog and several
other real estate websites. Visit
the author online at http://www.mortgage-refinance-advice.com/blog/