Today’s Consumer Has Access To Better Information
Buying a home in 2016 is a vastly more transparent process than it was just a decade ago.
All the knowledge was held by lenders and real estate agencies. The average consumer did not have easy access to non-biased information about their mortgage choices.
Since then, the power has shifted into the hands of the consumer.
Whether you’re holding a smart phone, peering at a tablet, or using a laptop or desktop, you’re armed with all of the tools and applications that you need to be able to make the best choices for your individual situation.
There are six prominent tools available today that every home buyer should use in the process.
Speaking to a lender is usually necessary at some point and is not a bad thing. But these tools can help consumers verify the information they receive from mortgage and real estate professionals.
1. Online Mortgage Rate Comparison Tools
There was a time when your lenders or mortgage brokers were the “keepers” of information regarding the best mortgage interest rates, terms, and loan options.
Thanks to the web, you can research all of this information—and more—right from your computer or mobile device.
Many sites also offer mortgage rate comparisons based on your personal information (e.g., location, loan type, loan amount, percentage down, and estimated credit score).
These online tools typically put you in touch with a lender, who will then give you a written quote. The only way to compare mortgage rates accurately is to get multiple written quotes from three to four lenders.
While online rate estimators give a general idea about rates, none can give you a truly accurate rate without formally applying for the mortgage.
2. Government Home Buying Helps
In September, the Consumer Financial Protection Bureau (CFPB) rolled out its Know Before You Owe initiative aimed at helping consumers navigate the mortgage process.
On its Owning a Home page, the CFPB gives you an interactive, step-by-step overview of the mortgage process, helps you decide how much you can afford to spend, and helps you explore and use the new Know Before You Owe mortgage forms.
According to the CFPB, the new mortgage disclosure rule replaces four disclosure forms with two new ones, the Loan Estimate and the Closing Disclosure—both of which were designed to be easier for home buyers to understand and use.
3. Mortgage Calculators
There is one drawback to having so much information available. Home buyers are often faced with analysis paralysis – too much information to effectively process.
At any given time, home buyers have to answer questions like, how much will my payments be, and what will I pay in private mortgage insurance (PMI), taxes, and insurance?
This is where today’s mortgage calculators prove useful.
Mortgage calculators now offer advanced features that help consumers answer questions like, how much home can I afford? Should I refinance my mortgage? Should I pay discount points for a lower interest rate?
The consumer can get a good idea on which options are best, then verify the information they receive from the lender.
4. Free Credit Profile
Your credit rating could be the most significant factor in your mortgage decision process. Your final rate and even the approval itself depend on your credit score.
To help you determine where you stand on the credit spectrum, The Fair Credit Reporting Act (FCRA) requires each of the nationwide credit reporting companies—Equifax, Experian, and TransUnion—to provide you with a free copy of your credit report, at your request, once every 12 months.
At AnnualCreditReport.com, you can fill out a form, select the reports you want, and then view them online. This site is the only government-mandated free credit report site, although there are numerous other services online.
Your free annual credit report does not include credit scores, but it will show you all accounts the credit bureaus have on file. You can dispute errors and unfamiliar accounts.
That way there will be no surprises when you apply for a mortgage.
5. 24-Hour Access To Lenders
Most lenders allow you to apply online any time. They know that not everyone can apply between eight and five, Monday through Friday.
Many lenders even offer after-hours bankers to work up written quotes after the typical bank branch has been long closed.
Once your online application is complete, many platforms allow you to submit additional paperwork by scanning and uploading it.
Online applications help consumers get the process moving despite their work or sleep schedule. In today’s 24-hour lifestyle, applying online is fast becoming the norm, not the exception.
6. Mobile Mortgage Applications
Taking the “virtual” lending process one step further, some companies are now allowing you to apply for a mortgage right from your mobile phone.
Expect to see more lenders offering mobile application, with the total number of smartphone users expected to reach 6.1 billion globally by 2020 — more than double the 2015 count.
These tools may offer the option to upload documents like pay stubs and bank statements. It could help to save necessary documentation to PDF for easy upload from a phone or tablet.