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 Positives and negatives of online mortgage lenders
  Pre-approved home loan vs. pre-qualified home loan
By the EchoBay Loans Expert
 Positives and negatives of online mortgage lenders
Dear EchoBay Expert: My sister-in-law found the best interest rates for her home loan through an online mortgage lender. What are the pros and cons of getting a loan online?

Dear Loyal Reader: The pros of using an online mortgage lender far outweigh the cons. As evidenced by the loan your sister-in-law obtained, online lenders tend to offer the best interest rates available.

Considering that a savings in interest can equate to thousands of dollars in your pocket over the term of your loan, that's quite a significant advantage. Another factor to consider is the ease of the online application process. Almost everything is handled over the Internet and on the phone, so the entire process is much more streamlined and takes a lot less time than the traditional mortgage application process.

Speaking of time savings, some online lenders provide you with instantaneous approvals that take literally seconds once you have submitted your application via their website. That wouldn't happen with a traditional brick and mortar lender. You probably won't be meeting with your lender face to face, so if personal interaction is something that you look for in service, you might not be as comfortable getting a loan online.

Another thing to consider is that the Internet can sometimes harbor less-than-ethical lenders, so make sure that you're working with a reputable lender prior to submitting any of your personal information. When working with a reputable lender, your online borrowing experience can be both easy and rewarding.

 Pre-approved home loan vs. pre-qualified home loan
Dear EchoBay Expert: Which loan is better to have before shopping for a house; a pre-approved home loan or pre-qualified home loan?

Dear Loyal Reader: A pre-approved home loan is better than a pre-qualified home loan. With a pre-qualified home loan, you basically have only had a conversation with your lender about your current situation. You give them information about your income, assets, employment and credit history. From this, they will decide how much you pre-qualify for.

But because the lender is just taking your word for it on all of this information, a pre-qualification is not any kind of binding agreement. When you are pre-qualified for a loan, you will still need to make your sales contract contingent on financing as it is not a done deal. When you are pre-approved for a loan, the lender goes a step further and verifies all of this information.

They will likely call your employer, check your bank records, ask for copies of your last two tax returns and pull your credit. At this point, the lender will usually charge a small fee for the application and your credit report. Once this information is in hand, the lender will pre-approve you for a certain amount within a certain timeframe.

With a pre-approval, you can have a sales contract that is not dependent on financing and you may be viewed more favorably by the seller. Be aware though if there are significant changes to your situation or if you exceed the approved timeframe, your pre-approval may be null and void.

If you are just beginning to look for a home, a pre-qualified home loan is a great way to have an idea of what you will qualify for. When you get serious about the home buying process, find a lender and get pre-approved. It will make the process much easier for you.

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