(A big “thank you” to habito.com for sponsoring this post!)
We are all so busy these days it’s no wonder so many of us are jumping online to pick up—or pick out—almost anything we need. Today, you can shop for almost anything online, from clothing to soulmates. If you wanted to, you could do nearly all of your shopping online. So it’s no wonder online real estate brokers have become a popular choice. But is using an online broker to purchase your home a good idea for you?
What Do Online Brokers Offer That’s Different Than Normal Brokers?
Online-only mortgage firms tend to have quirky, one-word titles, claiming to search thousands of mortgage offerings and recommend the perfect one for you. Most of the time, you will be having a conversation with a chatbot.
A report written by Guardian Money gave these online mortgage brokers a big thumbs up, stating that they’re well worth the try. A few of them offer free tools such as free mortgage and refinancing calculator to give you an idea of how much you will end up paying to get into a new home. You can also get a list of the most competitive offerings for people in your financial position.
This is an improvement from a few years ago when mortgage shoppers could visit a price comparison website and guess which deal was the best from a list of generic search results. Then, of course, there was the traditional mortgage broker—one that either charged you to research for you or gave you free advice with the hopes of getting a commission.
However, this new kind of online mortgage broker claims to employ designers, engineers, mathematicians and mortgage experts, as well as cutting-edge technology to make finding and applying for mortgages quicker and easier. Usually, these sites have a slick design to attract tech-savvy individuals. These sites get paid by the lenders whenever a borrower completes a home loan with them, just like a traditional broker.
Pros of Using an Online-Only Broker
- Since online mortgage lenders don’t operate in the same fashion as a brick-and-mortar mortgage brokerage office, they save a lot of money on overhead. This money-saving tactic allows them to pass those savings to the lenders they work with, which in turn benefits you. In many cases, online-only brokers will save you a lot of money on closing costs.
- Online-only mortgages carry lower fees and interest rate than brick-and-mortar brokers.
- Filling out forms online can save you time and allows you to work on your own schedule.
- Online-only mortgage brokers may be more flexible than in-person brokers when it comes to working with people who have lower than average credit scores.
Cons of Using an Online-Only Broker
- Since you’re filling out forms on your own, you may make a mistake here and there, or misunderstand a question or two. This could lead to problems further on into the process—problems that could cost you lots of money. That means you need to pay attention and take full advantage of the site’s contact options such as a 1-800 number.
- While some online-only mortgage firms are legitimate, others require consumers to pay up front for preapprovals and quotes. This is a sign that they are scams. It’s normal for there to be fees for appraisals, credit checks, among other things, but you’ll pay them when the services are received or at closing. (Something to look out for is misleading rates. This usually comes in the form of offering appealing, low prices only to claim you don’t qualify after they say they’ve checked your credit score.)
Are you on the market for a new home? We’d love to hear about the challenges and questions you’re facing in this process. Feel free to comment below!