Curve

How should I apply for a mortgage refinance: in person, by phone or online?

Pete Gerardo
The Mortgage Reports contributor

In this article:

You can apply for a mortgage refinance over the phone, online or in person. Just consider:

  • You can get mortgage quotes online without applying
  • You can apply for a loan online as well by completing a form and emailing documents
  • Applying online may be more convenient, but may involve more work on your part

You can apply any way you want. Just understand that responding to a phone or online solicitation could be dangerous if you don’t verify that the company is legit and licensed in your state.

Verify your new rate (Dec 9th, 2018)

Speed and convenience or personal attention?

If Artificial Intelligence (AI) becomes a bit more intelligent, there may be no reason not to apply for a mortgage refinance online. Truly intelligent AI will offer the speed and convenience of today’s online applications with the personal service that (so far) only humans can deliver.

Until then, the best way to apply for a new mortgage depends on what you want most: (A) speed and convenience; or (B) personal attention. You can’t have A and B.

Your decision may also depend on your generation.

According to a recent survey by Ellie Mae, 70 percent of millennials used an online process to complete all or part of their last mortgage application. In contrast,  55 percent of Gen-Xers did so, and 43 percent of Baby Boomers.

Overall, 45 percent of mortgage applicants completed the process entirely in person, while 16 percent completed the whole process online.

Online mortgage applications: pros

Not that long ago, getting a new mortgage was paper-intensive. And you usually waited a month or more before learning if the loan was approved.

Today, thanks to firms such as Quicken Loans’ Rocket Mortgage, as well as the websites of traditional lenders, the process has been streamlined.

Related: 6 online tools every mortgage customer should use

Instead of making calls or driving from bank to bank to get a rate quote, an online calculator can tell you this in seconds.

Using an app on a mobile device, you can also transmit your financial information — W2s, bank statements, etc. — to a lender within minutes.

Quicken Loans’ Rocket Mortgage says it takes about eight minutes with its mobile app to scan a driver’s license and W2 form.

Best of all, online lenders often offer lower rates and fees because they have less overhead.

Online mortgage applications: cons

On the other hand, if you need help with your application, it can be very difficult to get hold of a loan officer during regular business hours.

And while online applications are faster, they often involve more work on your part. You are the one uploading that data, not a loan officer. And keep in mind that online lenders are not necessarily cheaper — you’ll want to compare rates and terms.

In addition, online lenders aren’t well-suited for complex loans  —  like those guaranteed by the Federal Housing Administration.

Related: “New school” house hunting (buy a house online)

If you’re self-employed, talk with a human. The algorithms used by many online lenders tend to reject self-employed applicants.

Finally, you should know that some online lenders don’t make loans themselves. Instead, they submit your information to third-parties. Some of these companies are legitimate lenders. Some are mortgage-related businesses.  And some may turn out to be con artists.

Either way, you may find yourself bombarded by emails and calls after you press the “submit” button.

Getting mortgage quotes online, in person or by phone

A 2015 survey by Fannie Mae found that 70 percent of recent homebuyers would like to obtain a mortgage quote online.

That makes sense. The ability to do some fast comparison shopping is a big benefit offered by online lenders.

Calling individual mortgage lenders or making the rounds in person can take considerably longer. And if too much time lapses between the receipt of Quote A and Quote B, the comparison is meaningless. Rates may change more than once a day.

Related: Shopping for a mortgage (how many quotes do I need)

But “instant” online quotes can be deceptive. Until a lender receives more detailed information about you and your home, consider those instant quotes a ballpark estimate.

Before committing to an interest rate, a reputable lender will need your income, debt, credit score, the amount you wish to borrow and the value of the house you’re buying or refinancing. Without this information, the rate is just an educated guess.

And keep in mind that interest isn’t the only cost of refinancing a house. There are a plenty of other fees to consider – fees that usually aren’t included in instant quotes.

When it’s best to apply in person

If you want extra help, you’ll want to be in the same room with a loan officer.

You’re unlikely to get the kind of one-on-one customer service from an online lender that you will at a brick and mortar operation. That especially applies to service after hours.

Some other situations in which it’s best to apply in person:

  • When you have a shaky credit history
  • If your refinancing is somewhat complex – e.g. because you’re taking advantage of a government down payment assistance program
  • When your tax returns look like an encyclopedia
  • If your home isn’t typical for the area – in terms of lot size, design, condition, etc.

Applying for a mortgage refinance in person will help you avoid online mortgage scams.

Related: Which is better? A mortgage banker or a bank?

Online mortgage refinance scams are not the norm, and they are easy to avoid. However, if you reply to an unsolicited request or that of an unlicensed lender, you could be victimized.

Con artists use email, phone calls, direct mail and phony websites to separate victims from their money and their personal information.

Your best defense? Work with reputable companies. Never provide personal identifying information online when seeking mortgage quotes (they don’t need your social security number, just your credit score). Before applying for a mortgage online, verify the company and its mortgage license in your state.

Make sure any lender you deal with is licensed in your state. You can check their licenses online at the Nationwide Mortgage Licensing System. The site tells you if any disciplinary actions were filed against the licensee.

To help tell the difference between legitimate and bogus offers, check out this list of mortgage relief scams from the FTC.

Verify your new rate (Dec 9th, 2018)