Online mortgages are easier and more popular than ever
By Jim DeBoth | Special to the Sentinel
Posted February 1, 2004
Most of us already use the Internet for e-mail to stay abreast of breaking news stories, to shop and play games. So it's not surprising that people are using it to get mortgages. What is a surprise, however, is how fast the practice is growing.
According to a study by Jupiter Research in New York, roughly 4 percent of mortgages taken out in 2002 were financed online; that works out to 1 percent for new mortgages and 3 percent for refinances.
Today the number is climbing so fast that Celent, a Boston financial services consulting group, predicts that by 2005 35 percent of new loans will be generated online. In a recent report, the company says that 56 percent of U.S. banks and 70 percent of credit unions in the country have automated loan origination systems.
Kurt Pfotenhauer, a senior vice president for the Mortgage Bankers Association of America, says, many of the trade group's members are using the Internet to reach consumers.
"As with every other business, the Internet is changing the way we talk to our customers. It is making information more available to people. This is leading to a more informed borrower, and that will be to the benefit of everyone," he says.
Like other industry observers, Pfotenhauer says that as more people become computer literate and get used to doing more business online, online lending will grow.
Go online and type the words "online mortgage lender" into any search engine you choose. A recent Google.com search turned up 764,000 reports. Now try it with the name of your city. A sampling of cities included: 20,200 reports in Chicago; 17,200 in Houston; 8,570 in Pittsburgh; 12,700 in Las Vegas; and 2,620 in Knoxville, Tenn.
If you were to consult the Yellow Pages for any of those cities, the list of mortgage companies would be a lot shorter. If you were to pick those you could drive to in 10 minutes or less, the list would be shorter still.
According to Celent, the consulting group, online lenders have increased efficiency and profitability, lowered costs and increased the opportunity to offer loans to more people in more cities and towns.
John Waymire, vice president of HoustonMortgage.com, says his company started offering online mortgages in 1993. Today, all his business, covering Texas, is online. Waymire agrees that many people are hesitant to take out the single biggest loan of their lives without shaking hands with their loan officer.
"People get scared making a deal without human contact," he says. But they get that human contact over the phone. "There is always a personal contact. They can call us on the phone. They can e-mail us, or they can just fill out the online application and submit it. Once we hear from them, we give them a phone call."
One of the major advantages of working online is that lenders do not need as many offices. They are as close as the computer and the telephone. This translates into lower overhead. Although much of the process can be done electronically, eventually human beings have to sign papers. That's where overnight delivery services come into play.
When online lenders send an overnight package to a borrower, they normally include everything the borrower needs, as well as a phone number to call in case of any last-minute questions. The borrower still has to go to a real estate lawyer, escrow office, notary or title company, depending upon where he or she lives.
The Internet also is changing "when" people start looking for a loan. Once, home buyers found the real estate agent and the home they wanted first. The real estate agent was often the person who steered the buyer to a lender. No more. More and more real estate agents want to deal only with people who are pre-qualified for a loan. They ask for a prequalification letter before they are willing to talk to them. It's the same with a lot of sellers today; they want to deal with prequalified buyers. Waymire says, "The Internet is the fastest way to get prequalified." It is also a quick way to get a loan once you have found the home you want.
Continue with:
|
