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How to get an online mortgage

Aly J. Yale
The Mortgage Reports contributor

Yep, you can apply for a mortgage and even close online

Mortgages used to be a very paper-heavy process, with stacks of documents to sign and multiple in-person meetings.

Some lenders still work this way. But lately, the market has seen a surge in “digital mortgages.”

These tech-enabled mortgage applications remove much of the tedious, manual work normally required and streamline the transaction significantly.

Are you planning to buy or refinance a home? A digital mortgage could ease the process. Here’s what you need to know. 

Apply online with top lenders today (Jun 2nd, 2020)

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How online mortgage applications work

The exact digital mortgage application process varies by lender, but you can generally expect it to look something like this:

  1. Fill out the lender’s online application
  2. Connect your bank account and payroll portal to import your financial details, if this feature is available
  3. Submit any additional documentation your lender requests. You’ll likely upload this to some sort of portal or fax it over
  4. Order a home inspection. You can learn more about home inspections here
  5. Wait for your home appraisal. This is ordered by your lender
  6. Get homeowner’s insurance and provide proof of your insurance to your lender
  7. Attend your closing appointment, whether online or in person

In some cases, mortgage closing can be done totally online. This may include e-signing documents and a video chat with a digital notary.

>> Related: Mortgage closing: What happens at your signing

In other cases, you may need to attend an in-person appointment at your title or real estate agent’s office.

Your closing is also when you’ll make your down payment and pay your closing costs.

Is it possible to get a 100% digital mortgage

While there are some lenders that offer a fully digital process, in most cases, you’ll need to do at least a small amount of physical or in-person work along the way — usually at the closing table. 

For the most part, the majority of today’s lenders will let you upload your documents digitally; including your bank statements, tax returns, pay stubs, and more. Many even have online application forms you can fill out and submit. 

But the most advanced lenders? They have direct relationships with payroll processors, banks, and other financial institutions, letting them pull much of your financial paperwork directly from your vendors and even your employer.

This takes a lot of the work and hassle out of applying for a mortgage, and it speeds up the process significantly (documentation can often slow down your loan if you’re not on the ball). 

Finally, a few lenders even let you close digitally. Some have e-signing tools and digital notaries that take the closing table remote instead of having to meet in person.

For the most part, though, you can expect to attend a face-to-face closing meeting to finalize your loan.

It might sound like a hassle, but if you want to ensure all goes smoothly — or that you get the full break-down of everything you’re signing and why —  it can actually be quite helpful.

>> Related: Why closing on a house is better in person

How online mortgage applications save time

Traditional paper mortgage applications take time. The Uniform Residential Loan Application, which is used by the majority of mortgage lenders, includes a whopping 300 fields.

And if you’re shopping around? You’ll need to fill out several of these forms.

>> Related: How to shop for the best mortgage rate and lender

With digital mortgage applications, though, much of this tedium is removed.

Digital applications can often pre-fill a large chunk of the form for you, even pulling in data from your bank accounts, employer’s payroll system, and more.

This drastically cuts down on the time an application takes and kickstarts the processing and underwriting steps as well. 

For example, loanDepot — one of the most prolific online lenders — claims it can close on a loan in as little as eight days. For context, the normal time to close is 30-40 days on average.

Who can’t get a digital mortgage?

A number of lenders offer a 100%-online application and approval process, but keep in mind: these are generally reserved for borrowers with traditional, cut-and-dry profiles.

If you’re a more outside-the-box candidate, then you may need to hop on the phone or meet with your lender in person at some point along the way.

That might include people who:

  • Don’t have traditional 9-5 jobs
  • Are self-employed
  • Are retired
  • Need a jumbo loan
  • Have a lower credit score
  • Have higher debt levels
  • Etc.

Basically, anything that puts you outside the box of a “prime” mortgage borrower makes it harder to approve you.

Lenders will have to put in more manual work on your application. And you likely will, too, by meeting in person or being available for more phone calls than other customers.

Examples of online mortgage lenders 

A number of lenders provide fully digital mortgages, with Rocket Mortgage, Better.com, and loanDepot’s “mello smartloan” being some of the more popular options.

Here’s a look at what makes each of these options unique:

  • Rocket Mortgage — This lender’s a good option if you’re looking to apply for your loan via mobile app. It offers an easy application process and hands-on help if you need it. Plus, it comes from well-known lender Quicken Loans — the nation’s top-rated mortgage company for 10 years running
  • loanDepotMello Smartloan” — Smartloan is interesting in that it lets you import all your income, employment, and asset info digitally, and then makes personalized loan recommendations based on that data. You can then connect with an advisor to help you choose the best route. A nice perk of Smartloan is that it has a built-in appraisal waiver  process that can save you hundreds of bucks and lots of hassle (if your property qualifies). 
  • Better.com — Better.com is known for its customer service, as well as its low rates and closing costs. Like Smartloan, you also get assigned a personal loan advisor, and since they’re not commission-based, they’re able to give you honest, unfiltered advice. A quick note here: Better doesn’t offer VA or USDA loans, so keep this in mind. It’s also not licensed to originate loans in all 50 states.

Some other lenders offering digital mortgages include SoFi, HomeLight Home Loans (formerly Eave), and Guaranteed Rate.

Digital or not, always shop around

Whether you opt for a digital mortgage or not, be sure you shop around. Rates vary greatly from lender to lender, and you could save thousands by getting just one or two additional quotes. Start here to get several personalized rate quotes at once.

Verify your new rate (Jun 2nd, 2020)

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