Have you used an online mortgage lender?

May 9, 2018 8:16 AM

We had an offer accepted on a house (we currently own a home and plan to sell our current home and move to our new house in a year for retirement) and are shopping for a mortgage. Have you used an online mortgage lender?

The options are overwhelming and having only used local banks for a mortgage, it's testing new water. But the rates seem better for online banks at least for the estimates provided by places like bankrate.com. Tell me your experience good and bad! Any and all advice welcomed - thank you!

posted by bluesky43 to Work & Money (9 answers total)

We ended up not going through with a house purchase (bad inspection), but got quotes from online and local lenders early in the process. The online lender was willing to give a very low rate but was really sketchy. We used his quote to get a better rate from a local lender that our RE agent liked. Later the online brokerage seemed to go out of business. We also talked to Quicken Loan, but their rates weren’t better than the local lender. What I hear is that online lenders often do great rates but have a hard time delivering the loan within the escrow period, so they are better for refinancing vs home purchase.
posted by permiechickie at 8:22 AM on May 9, 2018 [2 favorites]

We had a positive experience with quicken loans for a refinance. Ultimately we didn’t go with them because our existing lender matched their rate and offered lower fees as soon as they got th request for a payoff quote but we would have used them.

The only downside I can think off with bankrate is that you will get calls and emails from the vendors you didn’t pick for a while after the fact asking if you want to refinance.

With our refinance we even locked twice, paid for two appraisals, and backed out if one. Lots forums online discourage that, but they’re all mortgage lenders who wouldn’t hesitate to pull out of a deal if the appraisal came back low or there were some other problem, so I didn’t feel bad about that at all.
posted by unix at 8:36 AM on May 9, 2018

this question is highly dependent on the kind of financing you are looking for. It you are doing a plain vanilla conforming mortgage, an on-line guy is great - you are buying a commodity.

If its a Jumbo ARM I/O you need to be a bit more careful.
posted by JPD at 8:49 AM on May 9, 2018 [1 favorite]

I think it might be for Massachusetts only at the moment but we've had a good experience with RateGravity so far (haven't actually closed). They're online but the actual loans are with local banks, so it's kind of the best of both worlds.
posted by mskyle at 8:58 AM on May 9, 2018

I've used one for a refi and it was fine. For a purchase, my realtor said he would have to fire us as clients if we tried that, but I think his logic was that we'd never get an offer accepted. Since you're there already, and since it doesn't sound like you're under time pressure to close in exactly 21 days or something, I think an online option should work fine.
posted by slidell at 9:08 AM on May 9, 2018

Yeah I would worry about timing, if timing is an issue. There is a middle ground of "not local but not online-only" where you could seek out credit unions that lend in your state but don't have a local presence. Pentagon Federal Credit Union comes to mind. They're serious mortgage lenders who won't disappear in a year and sell your loan to an even sketchier operation, and will work to close the deal. If you find a good mortgage rate at a not-local-to-you credit union you can just drop them a quick email to ask if they handle mortgages in your state.

You could also work with a mortgage broker, they have access to rates that aren't available to front-end customers. They can sometimes find really sweet deals that you'd never find on your own.
posted by rabbitrabbit at 11:10 AM on May 9, 2018

Online lenders often have requirements that don't get told to you upfront like a local lender will, just because they tend to work on volume and not service. So our online lender through LendingTree was happy to work with us until we offhandedly mentioned that the property hadn't been owner-occupied for eighteen months prior to sale, which was a deal-breaker for them.

Our local mortgage broker took an hour to talk to us and get the details on the property so he could recommend a lender whose criteria we met best. We met our local mortgage broker through our agent, and it was the best experience we'd had with a lender over the year and a half we'd been seriously looking.
posted by infinitewindow at 11:31 AM on May 9, 2018

Response by poster: Thanks so much! this was super helpful and we're thinking that given that this is *not* a refinance, an online lender may be too risky. There is also some time pressure as we hope to close in the next few weeks. Thanks again.
posted by bluesky43 at 2:23 PM on May 9, 2018

Had good experiences with Aim Loan for both a purchase and refi in California.
posted by doctord at 6:29 PM on May 9, 2018