getting a mortgage - banks vs. online services

[rh71]

We're looking for the best mortgage option/rate. I've heard that it's actually cheaper in the end to go with an online service like ETRADE financial rather than a bank (like Washington Mutual or Wells Fargo - we have in mind). Do you guys know this to be true? If so, are there any risks to going with an online-only presence?

I'm not talking only rates, but costs/hidden costs, etc.

If you vote for banks, would you go with a mortgage broker who would do the work for you?

 

[Moohooya]

Go for the cheapest. Check out all costs, rates etc. If you go with a local bank it MAY be easier to get, but they'll sell it to someone out of state within a few months. $50 a month savings adds up to $600 a year, which will be $18,000 over the life of a 30 year mortgage. That is either a new nice car, instate tuition, or you could make and extra $50 a month payment (called a prepayment) on the cheaper mortgage and you could save yourself $30,000 or more.

If you have poor credit, you may have a hard time getting one online, inwhich case you'll have to go local.

 

[rh71]

Thanx for the input. For the purposes of this thread, I have outstanding credit. Anymore thoughts?

 

[rh71]

^

 

[rufruf44]

The advantage of getting it from the local bank is that you can always go and physically meet someone instead of just talking to them via the phone if there's a problem, not to mention they should be able to work much faster than online services (no corespondence delay). If you're working with a realtor, he/she should be able to recommend you a good mortgage officer/bank. In some cases you can always ask them to match the best offer from online services. If the difference is just like 0.250%, and the loan amount is high enough, there's a good chance you'll get it.
Other than making sure everything get processed before closing date, I don't there's anything to worry about in obtaining loan from online services. They'll be naturally slower since there's the mailing delay to process all the information, and they'll have to work with local services (appraisal, home inspection, title company, etc) that they might not have work before.

 

[rh71]

You make a good point about online lenders having to get local "people" for the appraisal, etc. They won't make me pay for that separately would they? It should be included in all my closing costs, but would it still be cheaper in the end? Just looking for a lowest possible closing costs at this point... trying to make a 20% down payment happen.

Gracias.

 

[wyvrn]

I used an online bank because they beat my credit union by 0.35% and my bank by 0.85%. The appraisal was normal cost as they used a local firm, as should any lender. We made a 20% down and the closing costs were actually a little cheaper than either my CU or bank. The only drawback was the delay in correspondence, but it wasn't much because they used and paid for Fedex overnight. We didn't have to pay any shipping costs. My brother's loan was quicker because he sat down at the lender's office and did everything in two sittings, but I got the better rate and we still completed our process (from initial bid) in under 3 weeks.