Most will agree that, undeniably, the Internet is a great source of information about nearly everything. What can’t you find online?
There are many items I would not (or cannot) buy anywhere else but online. Things like pricey computer accessories, books, personalized items, car tires (yes, tires), vitamins, and lots more.
But I would not shop for a mortgage online. Not because I work in the business, but for several other reasons:
- I need a more warm and cozy, up close and personal feeling when dealing with hundreds of thousands of dollars for my home.
- There is nothing that an Internet lender 3000 miles away can give me that a lender 50 miles away cannot. They actually provide less.
- Too many bogus ads online.
- With the avalanche of information online, too much of it is out-of-date and unreliable.
- It can be difficult to tell if my personal information will be sold to numerous mortgage offices that will flood me with calls and solicitations.
What has gone deeply amiss in the mortgage business is “why” borrowers go online and “what” they want and expect from the transaction. Who knows where it started, but Internet mortgage shopping has become nothing more than a wild bonanza of “find who will give me (or say they will give me)” the lowest rate.
I do believe the original intent was to provide helpful information, but with all the competition, it became a race for who can quote the lowest rate. In that race, the consumer can come in last place. There is very little concern or emphasis on the transaction itself and probably zero discussion about whether the Internet mortgage consultant is a qualified professional who can properly handle the transaction. Anyone can quote a rate, anyone. No training required. Just grab a sheet (or not) and quote something – right or wrong.
There are far too many online advertisers who have rates and information that is inaccurate – saying it nicely.
There had been a lawsuit filed against one of the biggest online mortgage advertisers, Bankrate.com. Hundreds of consumers complained about lenders who failed to deliver the rates and terms they promised on the website. One lender actually told a Bankrate employee that a consumer would need a “direct pipeline to God” in order to get the rates and terms they advertise on the site.
Why would a lender post rates and terms they are unwilling or unable to honor? Perhaps to lure in consumers who truly want to believe that they are getting an interest rate or package that is significantly lower than everybody else. And by the time the consumer finds out they are not getting it after all, they likely have wasted enough valuable time that they feel somewhat stuck to use whatever terms the lender hauls out. And you can bet the lender has this in mind all the time.
Of course there are real reasons that the terms of a loan package can change mid-stream. When working with a reputable lender, it would generally only be caused by a change from what was submitted on the loan application. Changes in things such as credit, income, employment, appraisal value, debts or assets.
So are there any reputable lenders on Bankrate.com? Yes, of course. And some of those lenders were the ones who prompted the lawsuit in the first place. As they were posting real interest rates and terms they could actually honor, they could see that consumers would instead be contacting the less-reputable lenders who were posting completely unrealistic rate and cost offers. And the consumer might not find out the difference until it was too late.
Mortgage lenders get their money from the same place – so anytime there is a very large difference between quotes on identical programs, borrowers should ask a lot of questions because something is wrong in Mortgageville.
As mentioned above, the Internet is great for getting information. But where a mortgage is involved, borrowers should focus on finding find a professional to work with locally. A decision that won’t be regretted.
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