Tips for Online Mortgage Shoppers

Here are some tips for consumers surfing the Web in search of a mortgage.

* Beware of hype. Many online mortgage Web sites promise more than they deliver. Your “online application” may be little more than a referral form that alerts a loan representative to call you.

* Look for discounts. Plenty of lenders are offering rebates and discounts for borrowers who apply online. Compare the costs of applying online with the costs of a traditional application.

* Don’t let your guard down. Applying online may feel like such a novelty that you forget to look closely at points, fees and the interest rate. You still should shop around for the best price.

* Not for everyone. Applying for a mortgage online may not be the best choice for a first-time home buyer. Getting a loan can be complicated, and you’re likely to have many questions. Though many online loan sites offer telephone support centers or assistance by e-mail, first-time borrowers will probably want the hand-holding a human loan representative can provide. That’s why the vast majority of online mortgage business today is refinancing, not first-time purchases.

* Qualifying online. The criteria for applying online can be tight. Web sites tend to prefer borrowers seeking fixed-rate loans of less than $240,000 for owner-occupied single-family homes, not condominiums. Other common requirements are good credit histories and at least 20% equity in the property.

* Protect your credit. Applying for a mortgage online can hurt your credit if you overdo it. Each time a lender pulls your credit report, the inquiry is recorded. Too many credit inquiries in a short time period can hurt your credit rating just at the time when you need it to be its strongest. So think twice before submitting multiple applications unless you are serious and ready to get a loan. Be aware that once you provide your Social Security number, a company may be able to pull your credit report.