The Dangers of Applying for an Online Mortgage

Man using calculator while holding house model

Visiting a lender’s office to apply for a mortgage in Utah has become optional. Many financial products can be bought over the Internet, and home loans are no exception. Shopping for a mortgage online is convenient and can be even more affordable. Digital-only lenders might be willing to offer lower interest rates and to charge fewer fees than their traditional counterparts, for they have less overhead.

Although obtaining a Provo, Ogden, or Salt Lake City mortgage online comes with unique advantages, it still pays to do it the old way. Speaking with a certified mortgage planner might require more effort on your part, but it is worth the trouble.

Below are some of the reasons why online mortgages are usually not as good as advertised.

Costly Misunderstanding

One of the downsides of online mortgage shopping is confusing paperwork. It might be cool to process your home loan application in your pajamas, but you are likely to commit a mistake if you do everything on your own.

Talking with a mortgage planner reduces the likelihood of error. Chatting with an online representative is different from having a conversation with a live person. In a face-to-face meeting, you will get to gain more insights about a mortgage, to articulate your concerns better, and get more satisfactory answers.

Wrong Loan Choice

As mentioned, you might misunderstand a part of the process if you process your application exclusively online. In consequence, you might inadvertently pick an incorrect loan product for your unique needs.

Such a blunder can have significant and long-term consequences. While you can refinance a mortgage in the future, you usually have to keep a loan for a certain period before you can replace it with a new one. Till then, you will probably pay more money than should while you have the wrong mortgage.

Even when you are clear to apply for refinance, there is no guarantee that you will qualify for it. Your chances of approval always depend on your credentials at the time of application. If your financial standing remains the same or not better, you might struggle to get a better loan down the road.

Poor Customer Service

Man calling dialing on phone keypad

Online mortgage lenders are not known for excellent customer service. You might not have a dedicated professional to assist you, so you can deal with different a person whenever you need assistance.

Furthermore, you would not know for sure if it is safe for personal information with another party online. The same thing can happen with a live mortgage planner, but at least you know exactly who you are dealing with, not like an online representative with a random avatar.

Great Uncertainty

Online mortgage lenders are often accused of “bait and switch” practice, where the terms of a loan are changed at the last minute. The interest rate initially promised to you might no longer be available at closing. If you back out, you risk another hard pull, which can affect your credit more when done beyond a specific period.

The Internet addresses many of the pain points of home loan shopping, but it also entails new dangers. Whether you choose to deal with an online lender or speak with a certified mortgage planner in person, exercise due diligence to protect yourself from scams and to find the most favorable deal.

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