What is an online mortgage?
An “online mortgage” refers to a mortgage from a lender that has no physical presence, like Quicken Loans. That definition is changing, as even banks with brick-and-mortar branches all across the country — like Bank of America— offer high quality online mortgage capabilities.
We look for lenders that let borrowers apply, upload necessary documents and track the entire loan process via an app or a mobile-friendly website. But you’ll find plenty of lenders who offer even more online conveniences, like online preapproval, custom rate quotes or the ability to live chat with an actual person.
How does an online mortgage work?
The exact process varies depending on the lender. But in general, an online mortgage should allow you to accomplish key tasks like getting rate quotes, filling out an application and providing documents without having to sit down with a loan officer. In some cases, you may not even need to dig up all of the documents yourself.
Rocket Mortgage, for example, will electronically access necessary information from government agencies, financial institutions and employers (with your permission, of course). It claims finding all your information online can take days off the closing process.
Though with some online mortgage lenders you’ll still close the loan in person, “eClosings” are becoming more common. Some borrowers can now opt for a digital closing — once you’ve reviewed all the necessary documents, the actual closing can take as little as 15 minutes.
How do I find online mortgage lenders?
We’ve suggested 10 terrific options above. But if you’re trying to figure out the best online mortgage lender for you, you may want to look for a lender that suits your specific situation.
Even if you’re looking for online convenience, location matters. Some top online mortgage lenders aren’t available to borrowers in every state.
What types of online mortgages can I get?
Offerings vary by lender, but with a bit of searching, you can find an online mortgage lender for virtually any type of home loan. For example, in addition to conventional loans, some online mortgage options include jumbo loans, VA loans, FHA loans and USDA loans, plus refinancing and home equity lines of credit. SoFi offers jumbo loans with down payments as low as 10% for qualified borrowers and doesn’t require mortgage insurance for these super-sized loans even with a down payment that’s under 20%.
How do I choose an online lender?
When you’re evaluating online lenders, consider your goals. In addition to being sure that they offer the kind of mortgage you need, think about what’s important to you outside the application and approval process — after all, this could be a long-term relationship. Check out customer service options. Guaranteed Rate, for example, earns high marks for customer satisfaction.
Can I get an online mortgage loan with bad credit?
It’s possible to get an online mortgage with bad credit, but you’ll want to do some homework before submitting any applications. Look at lenders’ minimum credit scores and pay attention to whether those minimums are for a conventional or FHA loan. Mortgages backed by the Federal Housing Administration often have lower minimum credit score requirements.
The beauty of filling out an online application for pre-approval is that it’s fast, but the downside is that you can’t explain your financial background or credit history to a computer. If you’ve got a credit score that needs improvement or limited credit history, you may want to look for online mortgage lenders willing to consider nontraditional credit data.
