How To Shop Online For A Mortgage
After nearly ten years of working in the mortgage industry as a loan officer and
the Marketing Director for a national mortgage company that competed heavily online, I have gained a great deal of insight on how lenders and brokers compete and consumers shop for mortgages over the internet. Today, I run a marketing company which works on several mortgage rate shopping web sites and contracts with numerous local, regional, and national lenders on building their online presence. With that knowledge in mind, I would like to give you a step by step guide on how to shop online for a mortgage.Where to Shop - Option 1 - Online Rate Tables
There are a couple of routes you can go down. The first is to compare rates from multiple companies on rate tables located throughout the internet. There are a few big players in this space who provide the raw rate data for hundreds of web sites which, in turn, display interest rates, APRs, and closing costs to the viewing public. Probably the largest company in this space is Bankrate.com followed by QuinStreet and Informa Research. I have had positive experiences working with each of these companies and I believe that they do have the best interests of consumers in mind. The biggest advantage of shopping with rate tables is that you can compare rates from multiple lenders, brokers, and banks without having to speak with a handful of providers. The downside is that your loan scenario must perfectly align with the publishers' posting guidelines in order for you to qualify for the advertised rate. This can lead to some feelings of distrust from the public as the publishers' disclosures can be tricky to find. Lenders and brokers are also left with the unenviable position of having to explain why borrowers are unable to qualify for the rates that they see. In today's marketplace, lenders have rate adjustments for a large number of variables such as credit scores, loan-to-value, types of properties, and more. Borrowers who are shopping on rate tables should spend a few extra minutes trying to find the publishers' posting guidelines so that they can get a better idea of whether or not they may qualify for the posted rates. If you are misquoted and believe that the mortgage company is pulling a "bait and switch" maneuver, you should reach out to the web site owner and the rate table publisher with your argument. Most of the publishers will penalize the mortgage company involved if they did not honor a rate and it falls within the publishers' parameters. From my experience, you should use rate tables as a guide but you are still going to need to contact a few of the most competitive companies for a customized quote before selecting a provider.
Where to Shop - Option 2 - Lead Aggregators
Another popular choice is submitting a request through a lead aggregator. Companies such as LendingTree, LowerMyBills, and SecureRights are large aggregators who collect consumers' requests through their online forms and then sell that data to a number of mortgage companies who then contact users with offers. Today, many mortgage lenders and brokers use automated pricing engines which will quote a rate, APR, and closing costs within seconds. Then, your phone begins to ring. And ring. And ring. Many mortgage shoppers will attest to completing one lead form and then being inundated with phone calls from multiple companies from the second they clicked submit. From the mortgage companies perspective, they understand that the first person who speaks with the client usually has the best shot at earning the business. They also know that leads can be very expensive (i.e. $15-$100 for refinance leads) and they are not going to give up easily. If you want calls to stop, your best bet may be to answer the phone and tell them that you are no longer interested. You may also want to stick with some of the better known lead aggregator sites as they usually only sell your information to 1-5 companies.
Next Steps
Consumers may also be surprised to find out that once their credit is pulled, the various credit reporting agencies can then sell that trigger data to other mortgage companies who may contact you. And, don't be shocked if the mortgage company who holds your existing mortgage comes out of the woodwork with a pitch to refinance your mortgage (they may also be buying that data). No matter which route you decide to go down, do not have your credit score pulled too many times. While credit agencies may suggest that your credit score may not negatively be impacted if the inquiries are lumped closely together, you may want to play it on the safe side. Once your score is pulled once, just ask for your score and let the other quoting lenders and/or brokers know your scores for their quote. Yes, they will need to pull their own report if you elect their services . But, they do not need their own copy to simply quote you a rate and closing costs. Once you decide on a provider, be sure to ask for a written confirmation that your rate is indeed locked for a designated period of time. Do not fall victim to being told two weeks later that your rate was not locked and that rates are now higher. Whether you are going directly to the source or are using your knowledge to negotiate a more competitive offer from your local lender, broker, or credit union, there is little doubt that comparison shopping online can save you money. Best of luck finding a great deal on your next home loan.
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