Can you take out a mortgage online?

Quick insights

• These days, you can shop mortgage rates and lenders, apply and sometimes even close on a mortgage loan online.
• Some online lenders offer lower interest rates due to reduced overhead costs, making it an attractive option for borrowers.
• With digital tools for document submission, online mortgages could help streamline the home loan experience.

The world of home loans is evolving, and getting a mortgage entirely online might sound intriguing. You can compare rates, apply and sometimes even close your loan from the comfort of your home. But is it the right choice for you? Let’s explore what it takes to get a mortgage online and how it can simplify your homebuying journey.

What is an online mortgage?

An online mortgage is a home loan, but the process is completed electronically—you’d apply, submit paperwork and settle online. The process is meant to be convenient and efficient, often streamlined steps when compared to a more traditional homebuying process.

The basics of getting a mortgage online

Getting a mortgage online typically begins with researching and selecting a reputable online lender. Various digital tools might allow you to provide financial information, paperwork and signatures. Such lenders could also handle appraisals and underwriting digitally, while some even offer electronic closing. Whether any part of the process has to be done in-person depends on the lender and local regulations.

Is it possible to apply for and obtain a mortgage entirely online?

The exact process can vary by lender, but generally speaking, here are the steps you can expect:

1. Research lenders:Compare reputable online mortgage lenders to find rates, terms and reviews.
2. Check your credit: Review your credit score and report to ensure you meet lender requirements.
3. Get preapproved: Use the lender’s online tools to provide basic financial details and receive a mortgage preapproval estimate.
4. Complete the application: Fill out the online application form with accurate personal and financial information.
5. Upload documents: Submit required documents such as pay stubs, tax returns and bank statements, through the lender’s secure portal.
6. Review loan options:Compare loan types, rates and terms offered by the lender to choose the best fit.
7. Lock in your rate:If satisfied with the terms, lock in your interest rate to secure it during the rest of the process.
8. Appraisal and underwriting:The lender will arrange an appraisal of the property and review your application during underwriting.
9. Close the loan:Complete the closing process, which may include electronic signatures or an in-person meeting depending on local requirements.
10. Receive funds:Once closed, the loan is finalized, and you can move forward with your home purchase.

How do I find online mortgage lenders

Finding a mortgage lender involves researching and comparing reputable options to ensure you get the loan terms and experience that work for you. Here are some tips on how to find an online lender:

• Search online:Use search engines to look for top-rated online mortgage lenders.
• Read reviews:Check customer reviews on trusted websites like the Better Business Bureau.
• Compare rates: You can use comparison websites to review rates, terms and fees from multiple lenders.
• Ask for recommendations: Seek advice from friends, family or real estate agents who have experience with online lenders.
• Check credentials:Verify that the lender is licensed and accredited by organizations like the National Mortgage Licensing System (NMLS).
• Explore lender websites: Visit the websites of potential lenders to see their services, tools and loan options.
• Contact customer support:Reach out to test their responsiveness and get answers to your questions before applying.

Pros and cons of online-only mortgage applications

Online-only mortgage applications offer both benefits and drawbacks that you may want to consider when deciding if they’re the right fit for you.

Pros of online-only mortgage applications

• Convenience:Usually you can apply wherever you have internet-ready device, without visiting a branch.
• Competitive rates: Online lenders may offer lower rates due to reduced overhead costs.
• Comparison: Compare loan options and calculate payments with online tools.
• Less paperwork: Digital uploads streamline document submission and reduce clutter.
• Transparency:Track application progress in real-time through online portals.

Cons of online-only mortgage applications

• Limited personal interaction:Lack of face-to-face guidance can make the process feel impersonal.
• Technical issues: Website glitches or slow platforms may cause delays.
• Complex situations:Online-only lenders may not handle unique financial circumstances as well as traditional lenders.
• Security concerns: Sharing sensitive information online can be risky if the platform or internet connection isn’t secure.
• Closing challenges:Some jurisdictions may require in-person steps, such as complicating the digital process.

In summary

Getting a mortgage online can be a modern, efficient way to buy a property. An online mortgage refers to a loan that you apply for and settle electronically. This requires a certain type of lender, so you may need to sort through several potential mortgage lenders if you want to complete the entire loan process online.