Mortgage Lending on the Internet

Thousands of mortgage lenders now have Internet Web sites (also called home pages), and use the Internet to advertise their products and their companies to technology-savvy consumers. The Internet can serve as your Yellow Pages. You can use it for comparison shopping. You can find free computer software to help you better understand your mortgage options. There is a vast amount of information about mortgages, and the mortgage lending process available on the Internet. You can even apply for a mortgage online.

Unfortunately, the Internet is not organized like an encyclopedia. It is barely organized at all. Every site on the Internet has an address and to go to a site, you must first get the address. And companies change their addresses frequently. Internet search engines such as Yahoo and InfoSeek will list hundreds of mortgage-related sites.

Online Interest Rate Comparisons

Shopping for a mortgage is the best way to save money. The Internet is a great place to look first. You can get a very good picture of prevailing rates before you make your first phone calls to local lenders. Do not limit your search to the Internet. Local lenders may have lower rates than the national lenders advertising on the Internet.

Because a lender has a fancy, sophisticated site on the Internet, do not assume that their rates will be better than your local lender. Just as local lenders have very different rates, so do companies doing business on the Internet. Although there are real bargains to be found on the Internet, there are also higher than average rates.

Interest rates are subject to local variations. They tend to be higher in smaller markets than in larger urban areas, and they tend to be higher in areas with less competition. For a lender to do business in your area, it must be licensed by the state. If you are looking at the rates quoted by a lender on the Internet, be sure that it does business in your state. Otherwise, the rates may not be applicable to your search.

Finding a Lender on the Internet

There are two types of mortgage lenders you can find searching the Internet. The first type is what you would find if you went to your local Yellow Pages: traditional lenders with local branch offices who advertise on the Internet. It might be a national company with offices all over the country, or it might be a small lender with only one or two offices. The second type of mortgage lender does not have local offices. It does the entire mortgage application process over the phone through toll-free numbers. Whether you choose to apply with a local lender or the new breed of ''long-distance" lender, make sure to check their references.

Mortgage Calculation Tools

There are numerous free mortgage calculation tools available on the Internet. Some are built into the Internet sites where they are located, and others are small programs you can download, install and run on your computer.

These tools can help you prequalify yourself, calculate a mortgage payment, amortize a loan, perform a rent versus buy analysis, perform a refinance analysis and perform a variety of mortgage-related analyses. www.FinanCenter.com has a clever Java application that compares the cost-of-living differences for people who are relocating to another part of the country.

Applying for a Mortgage Online

There are several sites that ostensibly allow consumers to apply for a mortgage online. Most of these online applications are very unsophisticated forms that gather a little bit about you and do not constitute a full mortgage application. Most of these online applications will precipitate a phone call from a loan officer or will be followed up with a full application package in the mail.

There are a few sites where you could fill out an entire Fannie Mae/Freddie Mac loan application (Form 1003) online. Unfortunately, the application is too long and complicated, and the Internet is too slow to make online applications practical or desirable.