Real estate is a massive industry and the majority of buyers do not purchase a home outright. This means that there is a sea of banks and businesses that are willing to lend buyers the money needed to make that home purchase. How to do you decide which mortgage lender is right for you?
Here is our recent experience with purchasing a home through an online mortgage lender.
Choosing a Mortgage Lender
When choosing a mortgage lender, you should go with an entity that you are comfortable with and that checks the most (if not all) of your boxes. Do your research and get a few quotes.
I am a big advocate for online businesses and do as much business as I can online. Online services reduce the need for human interaction (I’m introverted, so that’s a plus) and typically provide more access than traditional/brick-and-mortar services.
Purchasing a car online through Carvana was a great experience, so I thought I’d check out online options for mortgages. We settled on Ally as our Mortgage Lender.
We have a number of accounts with Ally and I love their online platform so I was eager to see how they did with home loans.
Going with a Online Mortgage Lender
Ally had recently teamed up with Better.com to provide a more stream-lined mortgage buying experience. The process for Ally was fairly new so there were a few kinks they were working through, but ultimately I was happy with the online process. It gave me, the buyer, more control and information throughout the entire process.
Everything was completed online. Everything! I got our pre-approval letter online, within minutes. Once the home was under contract, we jumped right into the purchasing process. During the purchasing process, I was able to track their daily rates and play with mortgage options, like mortgage points and loan terms, to see how it effected our upfront and bottom line numbers. I was even able to strategically wait a few days before locking in my loan rate so I received the best daily rate.
The online process was easy to use and intuitive. Whether on my computer or on my phone, I had access to all documents and information throughout the mortgage buying processes.
Our Experience
Ally/Better.com was very easy to use throughout the mortgage buying process, but there were some struggles too.
Getting the pre-approval letter was exactly what I wanted because it was self-service and it was automatically generated in minutes. This was far better than my experiences with other mortgage lenders.
Choosing the mortgage plan and locking in the rate was a breeze. I was in complete control of the selecting my desired mortgage plan by mixing and matching configurations and seeing a price comparison for each. Also, since we were already Ally members, we received $500 discount towards our loan!
Submitting all information for the mortgage approval was easy. All information was gathered through a step-by-step process online and I could do it at my own pace.
However, working towards closing was a struggle. There were a few things that went wrong here that lead the process astray. In this stage, the mortgage lender is gathering data on the buyer, home, and closing process. This leads to changes in pricing from estimates to actual costs. As a result, I was seeing the numbers change every few days and not in my favor. Their team also missed a few details in the contract that caused some chaos before the closing. In the end, everything worked out but I wish it went more smoothly. We ended up not owing anything in closing costs between discounts, seller contributions to repairs and low closing costs from Ally.
Closing took longer than expected. We are not entirely sure what the hold up was, but Ally was very slow in transferring the funds. It took hours of badgering from the closing attorneys for Ally to release the funds and finalize the home purchase.
In the end, all went well and we became owners of a new home.
The Positives
- Lower closing costs and/or better mortgage rates than most mortgage lenders
- Buyer has a more inclusive role throughout the process
- Online access to information
- User-friendly platform
The Negatives
- More labor intensive for the buyer than traditional mortgage lenders
- Mortgage is typically sold in 30 days to a permanent mortgage servicer
- Too many cooks in the kitchen; we dealt with multiple contacts throughout the process
Looking back on the whole experience, I was happy to save money on the loan. It was nice to have a good online platform to manage the mortgage buying process, though I wish Ally was also the mortgage servicer rather than just the lender.
For those looking for a new home, I would suggest trying Ally or Better.com directly as their next mortgage lender.
