Online Mortgages

In today’s market and current financial situation, shopping for an online mortgage can be frustrating, if not plain downright frightening. As the credit markets have tightened and loans are harder to come by, it certainly can pay to shop online to find the mortgage package that fits your specific needs. One needs to consider several factors before starting their search, first and foremost being that one is ready to purchase a home by having adequate income, decent credit and some type of down payment. If you don’t have these as a minimum, you should consider waiting a while so that you can comfortably position yourself to get the best deal without worrying about having to pay extreme or adjustable rates and being able to negotiate on your terms.

For those that have the minimum requirements met, right now could be a great time to find a good deal on your dream home as housing prices have fallen and in many areas continue to do so, just make sure your new home is not in an area full of foreclosed homes or too depressed economy as this could hurt your future home price for many years to come. Of course, each individual should consider their own situation and make the deal accordingly.

My first advice when searching for an online mortgage deal is merely by using your favorite search engine, Google, Yahoo, etc. and type in your search for “online mortages in KY” for example if you are shopping for a home in Kentucky. I recommend this approach as each state has regulations and restrictions that vary from one to another, so this can help narrow your choice. Take a little time and jot down rates on maybe 4 or 5 of these sites just as a gauge of the going rate without worrying about the company itself. I also recommend going to the sites of 3 major banks, such as Wells Fargo, US Bank, Bank of America, etc. to see what type of rates they are giving. By doing this, you should now a firm average of what the current rate is nationally and in your particular area.

Once you have this average rate in mind, now you can start looking for the deal to meet your specific needs. The number one rule of thumb in all financial shopping to be reminded of is: “If it sounds too good to be true, it probably is.” Stay away from any company that promises something that you know deep in your heart just can’t be true. It’s easy to be tempted to think you can get a $250,000 loan for only $800/month notes, but that is not realistic and there is a catch. ALWAYS! Stay away from any of these so called deals and eliminate them from your search. I also recommend staying with a well known company, although it does not have to be a national company, as many regional and local banks have the best deals around, especiallly those that didn’t make bad subprime loans and have solid balance sheets and practice good financial lending habits.

Now you are in the weeds of finding your deal. You know a general interest rate you would like to beat based on your averages and you have a few companies to search. You should also base your search based on like loans, whether it be a 30 year, 15 year fixed or an Adjustable Rate Mortgage, VA or FHA. I would stay away from any adjustable rate mortgage and highly recommend for first time home buyers to check with their local and state agencies as they often offer assistance and lower rates for first time buyers with certain restrictions on income and location. These first time home buyer programs can be great though in that they provide you not only with a low interest rate, but often offer free classes that make sure you are ready to be a homeowner and educate you on the process and requirements. Military personnel may also consider the VA loans, but should shop around as the VA may not always be the best way to go. Normally a 15 or 30 year fixed rate is what I would recommend and try to put down at least 5 to 10% in the form of down payment to secure equity in the house and lower your montly payment.

At this stage, you know the type of loan you want, the interest rate you would like to beat by a .25 up to 1.00 percent and ready to make your choice. Make sure you read the fine print on all online deals to avoid any surprises later down the road. Make sure you can pre-pay loans without any penalty and that it is in fact a fixed loan, if that is what you are seeking. Also, most online mortgages will give you a break on credit check fees, application processing and other closing costs, which can save you hundreds if not thousands of dollars. The companies can afford to do this as you are providing most of the information and they don’t have to pay a full time staff sales person to handle the transaction. This is the biggest factor in making an online mortgage. Some people like to have a local person they can go to with questions and to help them along the way in the process. If you need that personal attention, I highly recommend you forego the online mortage process and visit your local banker. However, if you have purchased homes in the past and know the ropes so to speak, the online mortage can often save you a worthwhile amount.

Go ahead and find the loan company that offers you the best rate and apply with one or two that you have narrowed down. Make sure you let them know you are shoppiing around as they will normally offer you their best rate first if they know they are competing. Just make sure you don’t shop around more than 3 companies at the most with actual applications, as they will access your credit, and too many hits can lower your score which is the last thing you want at this point! Wait for their responses and always sleep a night before you make any decision. Once you get the best deal, make sure you keep copies of all records, e-mails and any correspondence between you and the company. This can save you many headaches and stress along the way.

Now you are ready to seal the deal and hopefully make the online mortage deal with the best rates, with a reputable company and get the lowest payment you can get on your new dream home. I realize this is a very generic model to search for an online mortgage, but it is so fundamentally critical to your success. 3 points if nothing else should be taken from this: 1.) Make sure you are financially and emotionally ready to purchase a home. 2.) Don’t be tempted to take a deal that sounds to be too good to be true. 3.) Try to stick with a local or national company that has been around for a while and that hopefully has referrals.

You can always ask friends, neighbors, co-workers as well as to where they got their mortgage. Ask specific questions and stay away from anyone that does not give you a clear and concise answer. You should have reasonable expections of ALL closing costs and expenses well before closing time. Also make sure you consider and discuss home insurance, homeowners fees, taxes and any other fees that might or might not be included in your mortgage. Good luck!