Online Mortgage Companies: Providing Affordable Home Loans

by: Rachel Jackson

When the housing market crashed, people all over the United States were thrown into a state of crisis, many of them at risk of losing their homes, and many more thrown into foreclosure proceedings. For those of us who had their homes financed heavily, the crisis was indeed something terrible to deal with. Good has come of this tragic bubble burst, however, in the form of home prices that we have not seen for perhaps a decade.

People who were not homeowners when the financial bubble started to go were not completely unaffected adversely by the drastic change, however these people may also have found themselves in a position that they did not expect to see themselves in for years to come; these people found themselves with the financial wherewithal to purchase a new home.

As housing prices have dropped through the floor, those who have managed to weather the financial storm were left with their savings intact, and a wide choice of properties from sellers who were desperate to have someone take the properties off their hands. These buyers may have eschewed the traditional mortgage lenders, and for good reason considering their recent track lenders, and may instead have turned to companies that may have had a slightly shadier image in the past.

It is easier to set up a fake or otherwise fraudulent online mortgage company than it would be to create a brick and mortar company with the intention to deceive. It is easy, as most of us know, to be anyone we want to be online. But those companies offering valid mortgages online may have a small advantage over companies that work exclusively out of their mortgage offices.

Lower Overhead for Online Lenders

An online company has significantly lower overhead than a brick and mortar office, with less space needed (since there is little need to entertain and impress customers), fewer staff because of the fewer branch locations, and less physical property, since the actual business of the loan can be conducted online. Every expense that can be spared, from letterhead to business card holders, is more potential profit for the lenders, or less that they have to charge their customers in order to make even an average profit.

The savings of running a business online can be passed down to the people who are looking for a home loan, and mortgages can be found at a lower rate online than a traditional brick and mortar lender might be willing to offer. This means that now is one of the best times in recent history to search online for a home lender and to apply for a mortgage.

Risks of Dealing Online

Although there are many good reasons to go with an online lender, it should also be mentioned that there are still scam artists aplenty who will take your money if you are not careful. A mortgage is a huge loan, and you need to be careful who you are dealing with, and where you send out your information.

Check with the Better Business Bureau to find out if there are any complaints against your online lender, and try to work only with lenders that your family, friends, or co-workers can recommend to you from their own experience. If your lender makes you uncomfortable, address the problem before you move on, or you may regret the experience of choosing them.

Weighing the Options

While it is easy to accuse online lenders of being thieves or cons, the record of the big names in home lending do not have such a shining reputation at this time, either. Some of the biggest names in mortgages have bought and sold trash loans, falsified information to give loans to people who should never have gotten them, and encouraged fraud on many levels, all in the name of profit.

Online lenders are stepping forward to help people get the low rate loans that they deserve and to put people into homes at a bare minimum of expense in this difficult economic time. If you are considering buying a home, look into online lenders, but beware interest only payments, adjustable rate loans, and being asked to slightly alter your financial information for their records. These are the kinds of unscrupulous behavior that put us all at risk in the housing crisis, and the resultant loans can be dangerous for consumers.

For the educated buyer, however, an online home loan at a discounted rate might be the ideal way to move into a new property.