How Online Lenders Are Helping Americans Secure Lower Mortgage Rates
If you’re looking for a mortgage, there are a few less reasons to walk into a bank.
Online lenders are transforming the mortgage industry and powering a more competitive market. Alternative mortgage lenders now account for almost half (45%) of all home loans.
Their goal: more transparency, speed and efficiency - and a mostly (if not completely) online process.
Here are 4 ways online lenders have changed the mortgage process:
1. It’s really easy to shop around
Mortgage marketplaces, like LendingTree, allow borrowers to submit one loan application and compare rates from a number of different lenders that fit their needs.
Once you submit an application you’re presented with a roster of potential lenders. You can then choose one, or several, of the rate options and then complete the process with the lender.
Even a tiny percentage in loan rates can mean thousands of dollars in savings over the lifetime of the loan.
2. They can save you a lot of time
The amount of paperwork involved in a mortgage transaction can be mind-boggling. Online lenders enable borrowers to submit everything online (no need to make an appointment at the bank) and thanks to technology and automation the underwriting process takes a lot less time.
Some lenders, like Rocket Mortgage, do the heavy lifting for you with services like automatic document retrieval.
And automated loan-decision algorithms have sped up the pre-approval process (less than 10 minutes in many cases).
3. Online lenders have more flexibility to work with credit-challenged borrowers
Following the 2008 housing meltdown, banks, once major players in the $1.5 trillion mortgage industry, began to back away from home loans, only lending money to the most qualified borrowers.
Online lenders are not regulated in the same way that banks are, and were able to step in to enable borrowers with less than stellar credit to secure a mortgage.
They can also offer a wider range of loan types and repayment terms, such as FHA loans (which cater to first-time homebuyers and borrowers with lower credit scores).
4. Lower closing fees mean less money out of your pocket
Online lenders tend to offer lower rates and fees than traditional lenders for two reasons: First, mortgage lending is a competitive field, and online lenders realize the best way to grab market share is by offering the lower interest rates and more flexible payment terms.
Second, they don’t have to pay for the same type of expenses and overhead costs as big banks.
When it comes to a 15 or 30 year home loan, a difference of the tiniest percentage point can translate to thousands of dollars saved over the lifetime of your mortgage.
Compare the Online Mortgage Lenders that Can Get You the Lowest Rates