One of the newest trends in the modern mortgage arena is the increasing use of full-service online mortgage lenders. This is hardly surprising—who wouldn’t like to apply for a mortgage while eating pizza from the comfort of your couch?
But despite its convenience, there are several disadvantages to going through an online mortgage lender that potential borrowers need to be aware of.
- Lack of trust and reliability.
While online mortgage lenders often boast that they are convenient, quick, and have competitive rates, they lack the personal touch that most people enjoy when buying a home.
Local mortgage lenders on the other hand are eager to win your business through their customer service and by creating a relationship of trust and reliability. Securing a loan is a stressful and emotional process. It helps to have a team of people to physically meet with to alleviate your concerns.
- Increased risk of fraud and scams.
One of the most obvious problems with going through an online mortgage lender is the danger of online scams.
You’ll be giving out a huge amount of sensitive personal information to your lender. Make sure that you know who you’re dealing with.
You’ll also want to be careful with any unusually low-interest rates or prepayment requirements. If a deal sounds too good to be true, it probably is.
- Problematic online forms.
Beyond the risk of fraud, you’ll want to be very careful with any online forms you fill out when using an online mortgage lender.
Online loan applications can be confusing. Since no one is with you to answer your questions—except perhaps a 1-800 customer service number with limited hours—you won’t have access to any kind of professional to walk you through your loan application. If you misinterpret one of the questions on the application or fail to notice something in the fine print, you might end up failing to get approved or stuck with higher fees down the line.
- Online isn’t necessarily the cheapest (or even fastest) option.
“Easy” doesn’t always mean affordable. A digital mortgage lender may not be your cheapest option, so it’s important to do your due diligence and compare rate quotes.
And while online mortgage lenders often are praised for how quick they can make the process for borrowers, if you have any unusual income or credit considerations on your application, you’ll probably need to explain these issues and provide extensive paperwork. This will slow down the process, especially if a traditional lender could have caught the issue and helped you earlier.
- Lack of local expertise and connections.
If you’re looking to buy a home in Utah, a traditional lender who is local to the area will be able to recommend trusted local professionals that can help ease your entire home buying experience.
The takeaway here is that you shouldn’t let convenience be the deciding factor for one of the most important financial decisions of your life. While there are certainly advantages to using an online lender, we recommend that you consider a local Utah mortgage company for your security and for the personal care and service you will receive.
Contact us today at 801-893-0844 to speak to one of our experienced mortgage professionals and discover the difference that Graystone Mortgage can make for your financing needs.