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An Internet mortgage is a loan that is applied for and serviced through a web-based lender. Instead of submitting an application to a loan officer or broker, the applicant works directly with the lender. The qualifications, documents and processes are the same as those with a traditional mortgage, but the rates and fees tend to be lower.
There are many Internet mortgage companies that have their own websites dedicated to receiving and processing quotes and applications. The majority of a borrower's questions and concerns are addressed in a non-personalized manner through the company's website. Applications, quotes and underwriting approvals are automated. There are typically no fees or obligations required of the potential borrower for filling out an application.
If a potential borrower decides to accept an Internet mortgage loan, an appraisal fee is required to secure the loan. As with a traditional mortgage, the lender will order an appraisal to be performed on the property through an outside vendor. The potential borrower has the option of locking in the interest rate that is in effect at the time the loan is secured or taking the risk of obtaining the current rate at the time of closing.
Most applications for Internet mortgages are automatically approved by the lender's computer systems. If there are any issues with the application, a lender representative will usually contact the potential borrower to verify the information is correct and obtain any documentation that could affect the decision. Regardless of whether an applicant is automatically or manually approved, he is required to submit proof of income to the lender.
Due to the fact that commissions are not needed for mortgage brokers and loan officers, the interest rates and fees for an Internet mortgage are usually slightly lower than that of a traditional loan. Origination fees and points still apply, yet a borrower might be able to save money over the life of the loan due to a lower interest rate. Loan funds are usually wired directly by the lender to a closing agent and loan documents are delivered and signed for at a title office or through an attorney.
Other websites provide Internet mortgage leads to potential borrowers. They direct borrowers to lenders that are willing to offer direct loans. Some of these sites may allow potential borrowers to compare rates, fees and loan conditions. Refinances, new purchases, residences and rental properties are all eligible for an Internet mortgage.