If you are in the process of refinancing your mortgage on the Internet, there are several things you need to know about online mortgage companies before applying. The Internet is an excellent tool that can save you money; however, hidden fees and markup of your mortgage interest rate could result in paying too much when refinancing. Here are several tips to help you avoid these expensive pitfalls when refinancing your mortgage online.
There are two basic types of mortgage companies you will encounter online. The first is the website of a bank, mortgage company, or the retail branch of a wholesale lender. These companies use their online presence to originate mortgage loans. The second type is what’s known as a lead generation site and has nothing to do with mortgage loans whatsoever.
Mortgage leads are big business. Several of the big names in Internet mortgages that you see advertising on television engage in lead generation and actually have nothing to do with mortgage loans. How do these companies stay in business and afford their expensive advertising budgets? The do this not only by selling the personal information of their visitors, but in some cases lining their pockets at your expense.
Computerized Loan Origination Fees
Selling leads to prospective mortgage lenders is one thing; however, one well known mortgage site that you’ve seen advertising on television takes the fees they charge too far with a “computerized loan origination fee.” Sites that charge these fees are required to disclose the fee and can be found on their Licenses & Disclosure statements.
In the case of the “Lending” site you see advertised on television, checking the Licenses & Disclosure statement reveals a $1,300 computerized origination fee that will appear on your Good Faith Estimate for their part in “arranging” your loan. Should you have to pay a lead generation $1,300 just for filling out a form with your contact information?
Don’t get me wrong, the Internet is an excellent tool for researching mortgage offers and can save you thousands of dollars when used correctly. You can learn more about refinancing your mortgage online while avoiding costly pitfalls like Yield Spread Premium with a free mortgage toolkit.
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