If there were an industry designed for the internet, the mortgage industry would certainly be included in the list. Prior to the advent of the world wide web, consumers would physically meet with their loan officer to complete a loan application and provide needed documentation. Later, in the late 1990s, online technologies began to take over. Loan applications were submitted online. Needed documents scanned and sent as an attachment.
Consumers could access their bank accounts online and obtain the most recent bank statements and again send as an attachment. Lenders took advantage. Automated Underwriting Systems, or AUS, took over and lenders today can obtain a ‘decision’ within a matter of moments. Credit reports and other third party services would order electronically. The industry became streamlined allowing lenders to approve more loans with more accuracy while consumers didn’t have to take time off from work or in the evening to physically meet with a loan officer to apply for a loan.
Let’s first take a look at getting interest rate information. Perhaps someone is thinking about getting an FHA loan. But before they do, they log onto the internet to get a feel for where mortgage rates are today. As we mentioned, the internet is a place for information but there are also so many different loan options that a conversation with a loan officer is paramount, especially early on before they get too much further into the process. There are multiple sites that provide current interest rate information while at the same time calculating monthly payments. Potential borrowers can enter their basic information such as their monthly income and current monthly credit obligations. By filling out some basic information, they can easily get an idea about how much they might qualify for.
By visiting the selected lender’s website, they can submit an application electronically. They can provide the requested documentation and receive an online preapproval. The lender can then issue a hard copy of the approval or the borrowers can download and print a preapproval letter. There are multiple ways to submit and document a loan, but most methods are generally the same.
Consumers can also go online to get their credit scores. The three main credit repositories of Equifax, Experian, and TransUnion have collaborated and created a consumer portal that allows consumers to pull a credit report and also obtain credit scores. Note, however, the credit scores aren’t exactly the same as the ones delivered to a mortgage lender but they’re close. The scores consumers get are ‘Vantage’ scores. The scores lenders use are FICO scores. Again, they’re not exactly the same but still provide consumers with a snapshot of their current credit profile.
As we’ve mentioned, it’s important to work with your loan officer very early in the process. There are too many options, many of which the consumer is not aware of, to go through this process without the consult of a licensed mortgage loan officer.