Owning your own home is one of life’s greatest joys. Mortgages make the ownership process easier because the option of buying a house outright is out of reach for most.
Choosing a mortgage lender can be an overwhelming process. Between online lenders and big banks, which option gives you better terms?
Big Banks are Not Always the Best Choice
Big banks offer certain advantages, especially if you’re already an account holder. It’s easier to access mortgage services because you’re building on an already established relationship. Some of the disadvantages of big bank mortgage lenders include:
You might have to jump through numerous hoops before qualifying for a mortgage. The assessment procedure might take weeks, even months in some instances. The loan might have to go through multiple departments for consent, which lengthens the process.
Big banks are notorious for having numerous charges that are not revealed to clients when they’re applying for loans. This might make an offer appear attractive at face value only for the costs to rise once you start repaying. Since mortgages last 15 to 40 years, a slight increase in your monthly payments might add up to thousands of extra dollars.
Traditional lenders are yet to take advantage of all the opportunities presented by technology fully. They still insist on cumbersome paperwork and unnecessary face to face meetings — these end up making the mortgage application and assessment process longer and costlier than it should be.
Most big banks retain mortgage lending arms as peripheral departments, so they don’t focus on improving service delivery to borrowers. Due to these obstacles, the popularity of online mortgage lenders has been steadily growing over the years.
Benefits of Online Mortgage Lenders
As opposed to big banks, online mortgage lenders are more versatile. They’re more adept at studying consumer needs and responding accordingly. Some of the benefits you can accrue by borrowing from online mortgage lenders are:
They try their best to adopt the latest technology. This translates into lower operating costs, a wider customer reach, and faster loan processing. Applications are easily made through their phone apps and online web portals.
Your creditworthiness can easily be gauged online by scrutinizing credit reports, tax returns, assets, and liabilities. You’re not even required to upload documents.
There are various tools available for a more efficient application process. Online lenders make pre-approvals easier, as well as providing you with mortgage calculation tools. Through partnerships with online mortgage brokers, it’s easier to choose the most suitable lender. These brokers make it easier to compare services and rates offered by various lenders.
Because of their focus on mortgages, online lenders can afford to give you a more extensive range of options. This makes it more likely to find a product that suits your needs. The most popular services offered are fixed rate and adjustable rate mortgages. Other customized services include VA home loans and Federal Housing Administration (FHA) mortgages.
Not surprisingly, the above features have transformed online lenders such as Quicken Loans into the largest mortgage providers in America. Their flexibility also gives them an edge over big banks. Today, various online lenders have niches they focus on. Some concentrate on refinancing, while others cater to low income and self-employed individuals.
Final Note for Home Buyers and Homeowners
From this article, it’s clear to see that online lenders are the better option. With them, you have greater control over your mortgage application process. Before applying, various online tools give you a realistic projection of interest rates, processing fees, and repayment periods. This is in stark contrast to the slow and complicated process you’d encounter with big banks.