21% of homebuyers used the internet to shop for a home loan, according to a survey by Lending Tree. Various mortgage services have noticed an upward trend in the use of the internet by homebuyers to research the best home loan options, with some reporting upwards of 65% of clients submitting applications online.
Real estate owned (REO) property auctions have also recently entered the online fray, opening property auctions to online bidding. In 2010, Auction.com sold all its commercial properties and notes through online bidding.
The mortgage industry is gearing up for the next generation of homebuyers who are computer literate and prefer to conduct their own independent research using all the technologies available to them. Many predict the majority of Generation Y homebuyers (those born in the ’80s and ’90s) will prefer to conduct business over the internet. Still, skeptics believe face-to-face interaction with a broker or agent will remain the preferred method of conduct for the most important financial transaction in most people’s lives.
first tuesday take: As the age of technology takes over the mortgage market, agents and brokers must distinguish themselves as being computer literate to earn the business of the new generation of up-and-coming homebuyers. Homebuyers of the future will demand as much information as possible before agreeing to purchase a home or close a loan, and they will rely heavily on the internet for this research – especially if the listing agents are not forthcoming. [For more information regarding technology in real estate, see the October 2010 first tuesday article, Social networking has proven valuable to agents, and the November 2010 first tuesday article, Generation Y is still chasing their dream of homeownership.]
However, for a transaction that relies heavily on proper documentation and disclosure, agents and brokers need to aggressively encourage, not just advise, their homebuyers to meet face-to-face with multiple lenders to ensure that all questions are properly addressed before signing on the dotted line. Submitting multiple loan applications to multiple lenders will also ensure the buyer receives the best and most competitive rates with any duplicate application fees being the premium they must pay to protect themselves with alternative arrangements at the time of closing. [For more information regarding loan shopping, see the June 2010 first tuesday Form of the Month, A borrower’s mortgage worksheet: who has the most advantageous financing.]
Re: “Mortgage industry trending toward digital transactions” from Housing Wire
What a shame. While I do feel like educating oneself is a good idea, the internet is not always the source of reliable and current information. As a mortgage consultant, I find myself constantly having to correct misinformation obtained from the internet. Since mortgage guidelines are rapidly changing, it is less effective for a consumer to try and “do their research” over a period of weekends and evenings when they have time, when the end result could be that the information is no longer valid by the time they’re ready to begin.
It’s been a really long time since I checked out Lending Tree. Back when it first came out, I thought I’d give it a try. I specifically entered that I was interested in a Stated Income Loan (this was back in 1998 mind you), that I could put 50% down, that I was self-employed, and that the ONLY method of contact I wanted was email. What happened was I instantly got several “offers” all asking me for tax returns and other documentation (when I had requested stated income) and my phone began ringing right away with loan officers from E*Trade and other companies calling me in response to my inquiry. I figured at the time that Lending Tree was no more than a glorified lead generation list for those lenders who subscribed, not a mortgage professional that would actually LISTEN to my needs and help me make a large important financial decision.