Napa, CA – U.S. Housing News — Consumers today are more comfortable using online mortgage applications, as evidenced by a recent survey of homeowners. In 2007, only 37% of respondents said they would apply for a mortgage refinance online. In 2010, 59% said they would apply online.
The Home Buying Institute recently conducted a survey among homeowners who were planning to refinance their homes. We asked them about mortgage refinance online. Specifically, we wanted to know how many people were planning to apply for a loan online, as opposed to doing it in person. More than half of the respondents (59%) said they would to use the Internet to apply for a mortgage refinance loan.
This is a significant increase over a similar survey we ran three years ago. In the summer of 2007, we conducted a survey that asked the very same question: Would you apply for a mortgage refinance loan online? Back then, only 37% of respondents said they were comfortable with online applications — compared to the 59% from this year’s survey. Three years ago, the majority of respondents were reluctant to start the process online. But times have changed.
There are several reasons for the rising popularity of online mortgage applications:
- People are more comfortable using the Internet to apply for loans.
- There are more websites that allow homeowners to apply for refinancing online.
- Most likely, it is a combination of these two factors.
Regardless of the reasons, online mortgage refinance is clearly becoming more popular among homeowners. But how does the process really work? How much of it can be handled online? Is it a real application, or just a lead-generation tool. Here’s what you should know about online mortgage applications.
Online Mortgage Refinance Tips
Applying for a mortgage refinance online is fairly simple. You visit the website of your choice, and then you fill in the appropriate information. After that, somebody from the bank or lender’s office will contact you for more information. But there are several things you need to know before you start applying for loans online. Follow these tips for success:
- Check your credit score. If you want to secure a low rate on the new loan, you’ll need to have good credit. The higher your FICO score, the lower the rate you can get. We recommend checking your credit at least three months before you pursue a mortgage refinance online, if at all possible. It takes time to boost a FICO score, so find out where you stand today.
- Use reputable websites. When you apply for refinancing online, you need to be careful which sites you use. We have seen websites that asked for sensitive information like Social Security Numbers, but didn’t even have a basic security system in place. You can reduce the chance of identity theft by using reputable websites owned by banks or lenders you know.
- Gather your documents. When you apply for a mortgage refinance online, you’re really just starting the application process. You won’t be approved based on the online application alone. You’ll have to follow up with some additional documents. If you start rounding up these items up now, you’ll have a smoother application process. Here’s a partial list of documents to get you started. Ask the lender what else they might need.
- Consider your equity. Property values have dropped in most parts of the country, resulting from the housing bust that began in 2008. As a result, millions of homeowners are upside down in their mortgage loans. Many more have seen their equity shrink considerably. If you don’t have enough equity, you won’t be able to refinance. You don’t necessarily have to get the house appraised — the lender is going to do that anyway. Just file this away in the back of your mind.
Applying for a mortgage refinance online is a great way to get the ball rolling. It’s also a good way to shop for interest rates, closing costs and loan terms. But you need to be prepared for the process. You can learn more about this subject from the refinancing section of our website.