Real Estate News

Online Mortgages Not For First-Timers

SAN JOSE, CA -- First-time home buyers should avoid mortgage Web sites -- except for their rate comparison and educational features. The complexities of obtaining a home purchase mortgage makes the Internet better suited for current homeowners looking primarily to refinance existing mortgages, according to Warren Myer, CEO of BestRate.com. "I recommend that first-time buyers go on-line, compare rates and get all of the information they need, but when they are ready to get the loan, find a local company to fulfill the transaction," said Myer during an interview with news anchors Daryn Kagan and Bill Tucker for a recent segment of CNNfn"s "In The Money." "Lower rates from the Internet and the service of a financial professional. They get the best of both worlds," said Myer, also owner of Myers Internet Services, a mortgage industry consulting firm that also hosts Web sites for mortgage companies. "The only buyer -- the only consumers that I would recommend going online to get the whole process done would be someone who"s got a mortgage three or four times. But if this is the first time you"re getting a mortgage, you"re much better off working with a local company," he said. That"s because online loan systems are largely cookie-cutter formats designed for assembly-line speed -- a better fit for less complicated refinanced mortgages. Home purchase mortgages, involving two parties and a longer escrow aren"t always a good fit for computerized loan systems. Discussing the impact of rising interest rates on the mortgage industry and how consumers can best use the Internet when securing a mortgage loan, Myer had different advice for previous homeowners or those looking to refinance. "Home owners who have been through the process before and wish to refinance their homes can successfully complete the entire process on-line," said Myer during the interview. Kagan said, however, the online mortgage boom will continue to attract many more borrowers, among them first-time home buyers. In 1998 21,000 consumers got online mortgages, but by 2003 that number will soar to nearly a million consumers, she said. Myer, who claims to have built 700 mortgage Web sites, said the Internet"s existing 5,000 mortgage Web sites will balloon to 50,000 in the next three years to meet the demand. Among them will be more of them catering to the first-time home buyer, according to Myer"s "1998-1999 Mortgage Industry Survey," which revealed a Web-based mortgage industry eager to please all borrowers. "Our findings indicate 2000 will pose key challenges to mortgage companies as they scramble to capture a piece of the purchase money market," says Myer. Through interviews with companies after his survey, Myer found that Calabasas-based Countrywide Home Loans, Inc. and Mountain View-based QuickenMortgage, Intuit"s on-line mortgage center, both claim to have overcome the on-line mortgage originations slow down. Countrywide is cashing in on its affiliation with real estate agents and its network of branch offices. Consumers skittish with security concerns about on-line loan applications prefer to complete a hands-on application, said Myer. The Myers Internet Services survey of the on-line mortgage industry appeared as "Internet Lending Is For Real," in the August 1999 issue of Mortgage Banking magazine, and is available for $8.95 from the Mortgage Bankers Association of America at (800) 793-6222. Editor"s Note: BestRate.com carries some of Broderick Perkins" mortgage stories, after they are published on RealtyTimes Also See: An Industry Analyst Looks at Online Loans E-Mortgage Sites Proliferate On The Web Shopping For A Mortgage Online Should You Get a Mortgage Online?

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