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The Internet lets you apply for a mortgage from lenders across the country, expanding your options for finding the best loan. At the same time, you might feel uncomfortable going online and filling out a form with detailed personal and financial information - your full name, Social Security number, current address, employer, salary, and more - exactly the kind of information that scammers and identity thieves would love to get their hands on.
To find a trustworthy online lender, follow these tips:
- Stick with companies you've heard of. When you're looking online, get recommendations from friends and acquaintances, just as you would when looking for a local lender.
- Know what's a realistic rate. Before you go loan shopping online, check interest rates locally (call a couple of banks or look in the newspaper) to get an idea of what they are in your area. Reputable online lenders' rates will be in the same ballpark.
- Be wary of big loans. An online lender may say you qualify for a much larger loan than other lenders offer. Some predatory lenders dangle a loan that's more than you can reasonably afford so you'll have to take out subsequent loans at a much higher interest rate to keep up with your first loan's payments. Every lender determines its loan amounts differently, but there shouldn't be a huge difference between the highest and lowest loans they offer you.
- Check the lender's "About Us" page. See how long the lender has been in business (the longer its track record, the better).
- Check the lender's track record. Federal agencies have websites where you can check to see whether a lender has gotten in trouble with the feds:
- Federal Trade Commission (www.ftc.gov). The FTC, a consumer protection agency, collects complaints about companies, business practices, and identity theft.
- Federal Deposit Insurance Corporation (www.fdic.gov). If the lender is federally insured, search for it on the FDIC's website to get more information.
- National Credit Union Administration (www.ncua.gov). Some credit unions have online loan forms. Before you apply, check out the credit union with the NCUA. - Look for complaints at consumer review sites. To read about problems consumers have run into with online lenders, check out www.consumeraffairs.com and complaints.com.
- Don't get hooked by a phishing scam. When scammers go phishing, they send out official-looking emails promising a great interest rate or no credit check. The email includes a link that takes you to a website with a form for you to fill out. But instead of giving you a rate quote, the scammer steals your personal information. If a too-good-to-be-true mortgage offer lands in your email inbox, don't fall for it. Never click a link in an unsolicited email offer.
Here are some online lenders that have been in business for a while:
- Ditech (www.ditech.com). Owned by GMAC, this company has been around since 1995.
- EverBank (www.everbank.com). Based in Jacksonville, Florida, this company offers mortgage loans nationwide.
- LendingTree (www.lendingtree.com). This site lets you compare loans from up to four different lenders to find the best rate.
- Quicken Loans (www.quickenloans.com). National Mortgage News named Quicken Loans the largest online lender in the U.S.
Most online lenders show you current interest rates and provide calculators that let you compare loans. If you have any questions, you can contact the lender several ways: fill out an online form, chat in real time, or call them.
