More and more financial services are being offered online these days. One that has recently seen a surge in popularity is digital mortgages. Although online home loans are convenient, there is an inherent risk involved. Here are just a few reasons why an Internet broker (or E-Broker) might not be best.
Not Really Applying
Many people believe that by filling out a mortgage application online, they are actually applying for a loan. That’s not necessarily the case, as you could be entering your information into a database instead. From there, your data might be disseminated to an unlimited number of companies, who would then begin flooding you with offers that may or may not be legitimate.
Don’t be surprised if you are inundated with phone calls, emails, and snail mail letters asking you to take out a loan. You might even be contacted by insurance agencies, home improvement companies and other such vendors.
Even when mortgage approvals take place online, you must still meet in person during the closing. Depending on where a lender is located, you could need to travel some distance in order to make this happen. Some companies might offer to meet you locally, then fail to show when the time arrives. Tracking these individuals down is often a nightmare, as many unscrupulous agencies tend to disappear without a trace.
Lack of Personal Service
Online mortgage brokers usually have slim profit margins, meaning they must rely on volume to make a living. As such, there is little incentive to build a personal relationship with you. Internet lenders know there is only a small chance you will use them again, so they are not worried about earning your repeat business. All they are concerned about is getting you approved with as little extra effort on their part as possible.
This lack of personal service means you might find it difficult to get answers to your questions. Phone calls and emails may go unanswered, or you will receive only vague, “cut and paste” type responses. On the other hand, you can always visit a local banker in person, and are more likely to get answers when a lender physically sees you. It will also be harder for them to manipulate you, since you are also in a position to read their body language.
Difficult to Assess Reputation
It can be difficult to know what an online lender’s reputation is. Many change names often, particularly after receiving a high number of bad reviews or Better Business Bureau complaints. Some will even close down their websites and set up completely new ones.
On the other hand, you probably know people who have recently taken out a mortgage, and can get first-hand knowledge about their experience. You can also determine which lenders have been in business a long time, and which ones have a vested interest in your community.
The idea of taking out an online mortgage may sound enticing. However, the risks do not outweigh the benefits in most cases. Even in today’s digital age, using an in-person lender located at a brick-and-mortar establishment is still the best way to go.