Best Online Mortgage Lenders of 2024

What Are the Benefits of Online Mortgage Lenders?

Buying a home can be very daunting, especially if you’re new to it. Everything from searching for the right home, understanding your mortgage options, and managing all the paperwork can be stressful. Thankfully, online mortgage lenders have simplified the process of searching for and securing the right mortgage. Here are the advantages of getting a mortgage online:

If you don’t meet these minimum service requirements you may still qualify if you were discharged due to a medical condition or a service-related disability. You may also still qualify if you served at least 20 months of a two-year enlistment.

If you’re still not sure if you are eligible, contact a VA lender directly.

Weighing your mortgage options

With online mortgage lenders, you can conveniently get quotes from multiple lenders when mortgage shopping. A range of mortgage options allow you to choose a mortgage loan that suits your financial needs.

To get customized quotes, browse through various lenders' websites and make an application. It’s much more convenient and quicker than visiting physical branches. Most online lenders have a wide range of tools like online mortgage calculators to give you a quick estimate of your monthly payments for your mortgage. Online resources provide an interactive experience for researching, cross-referencing, and comparing mortgage options.

Easy and convenient loan application

Online lenders don’t limit your mortgage search or placing your application to business hours. When making an in-person application, you’ll need to make an appointment with the loan originator and may need to make several visits during working hours. With online lenders, you can make an application anytime.

When applying in person with a traditional lender, you may need to submit copies of a range of financial documents, and if you don't have access to a copier, that can be a hassle. Online lenders allow you to scan and upload your documents, saving time and effort. An online process may not even have to be done all at once, so you can add needed documents like pay stubs, bank statements and tax returns to your file as you locate them.

Fast pre-approval and closing

A pre-approval requires you to submit paperwork detailing your financial information and wait for the loan officers to review them before receiving a pre-approval letter. Online lenders have streamlined this process, allowing you to get a pre-approval and loan estimate in minutes.

Online dashboards give you real-time access to your loan information. You can view your application status, verify and edit documentation, make changes to your pre-approval, electronically sign disclosures and chat with a representative if you need assistance. The automated underwriting process speeds up loan closing.

Lower fees and interest rates

Fees and other closing costs typically amount to 2%-5% of your home's value when you buy or refinance real estate. Using highly-automated systems, online lenders often have lower overhead costs. Some lenders pass these savings to their borrowers by reducing fees and other closing costs including not charging application fees, origination fees or underwriting fees.

Things to Look For in an Online Mortgage Lender

For the most part, usually an online mortgage lender will offer the same benefits as a conventional lender. The first thing you’ll want to know is what kind of interest rates they offer, and the loan amount you qualify for. For the actual rates, terms and fees that will apply to your loan, you'll likely need to place an application, the same as with a traditional bank or credit union.

But you can learn many things before you apply. These include:

• The types of loans available - Different lenders offer different types of mortgage. Are you looking for a fixed rate mortgage or an adjustable rate? Are you looking for a FHA loan, a conventional loan, a jumbo loan or a VA loan? Not all online lenders offer every possible mortgage product, so make sure your lender offers the type of loan you want especially if you’re a first-time home buyer.
• Their minimum credit requirements - Every lender has its own credit score requirements. If you don’t meet their minimum credit score threshold, you won’t be able to qualify. Make sure to pull your credit report as early as possible to know your eligibility status. For people with marginal credit, it’s an easy way to narrow down your lender options.
• Whether or not they offer a mortgage rate lock - When you qualify for a mortgage, the offer is conditional. Depending on market conditions, your rate could go up or down. With a market rate lock, you get a rate for a set period of time. Rate locks typically range from 30 to 60 days, and some lenders allow you to lock your rate before you've even found a house to buy.
• Whether or not paying points is worth it - Mortgage points, also known as discount points, are a way to reduce your loan’s interest rate. While you don't have to pay them, each point you do pay will reduce your interest rate by a set amount. If you can pay a point or two, the lowered interest cost of the loan will pay you back over time, and you may ultimately be able to save a lot of money over the life of the mortgage.

How Do I Know if an Online Lender is Legitimate?

According to the Consumer Financial Protection Bureau (CFPB), there are two ways to see if a lender is legitimate. The first is to check the Nationwide Mortgage Licensing System & Registry (NMLS). This is an online database of all licensed mortgage originators. You can also check with your state’s financial regulator. While often the banking department or commission, the entity will be different from state to state. To get more information on your lender, do a quick search of the lender’s name with the Better Business Bureau (BBB), too. You’ll get genuine reviews and complaints about the lender, and how they rate in their business dealings and reputation.

Conclusion

Choosing the best online mortgage lender isn’t that much different from choosing among traditional lenders. You want to see what types of loans are available and what interest rates you qualify for. You want to know whether the lender offers a free mortgage rate lock whether or not it makes sense for you to pay points. You'll also want to research a bit and learn more about how their services will work for your situation..

That said, online lenders don’t have any physical presence, and many of them are lesser-known. This makes it harder to determine whether a lender is legitimate. Thankfully, you can look any company up in the NMLS to make sure they’re federally licensed, and it's fairly easy to research for more information about any lender with the BBB and other online sources. Once you’ve done that, you’ll be able to draw up a short list of lenders, and submit your application to an online mortgage lender.