Using internet banks for a mortgage?

[R2D2]

My friend is looking for a mortgage to buy an apartment. When we went to bankrate.com to compare rates, we found that brick & mortar banks are around 4.25% for a 30-year fixed, while there were some internet banks (e.g. "First Internet Bank") that would charge 4.00% with zero in fees!

Has anyone every used an internet bank and are there any issues we should be aware of?

[erock139]

If it's of any help, we ended up going with GoodMortgage who then sold it to Chase. I think we found them through the MortgageProfessor.

[Pranav]

We have a mortgage with Capital One 360. No issues. We uploaded / downloaded documents through their website and communicated through emails and phone just fine. You may consider them and compare against other options.

[FeesR-BullNotBullish]

Be sure to consider the type of housing market you're in. In our competitive market, it was invaluable that our local mortgage broker was in touch with the seller's realtor before we submitted an offer. His attentiveness gave us instant credibility in the eyes of the seller. I don't know if an Internet bank will provide that service and "have your back" in the same way. Even in a cooler market, there will be individual houses that stand out among the rest will generate a lot of interest. Maybe an Internet bank can excel in making you stand out, but I my positive experience with a local mortgage broker will persuade me to go the same route if I purchase again.

[michaeljc70]

Yes, I've used them multiple times. They will probably sell the mortgage within weeks of closing so they won't handle the servicing. Just make sure it is reputable and not some site to steal your personal information.

[R2D2]

Yes, I've used them multiple times. They will probably sell the mortgage within weeks of closing so they won't handle the servicing.

Is that bad? (Serious question -- I don't know a lot about this.]

Thanks for the other replies. Someone mentioned Capital One 360. I'm not surprised that they worked out ok; I hadn't even thought of them as an online bank! In this case, Cap One 360 is somewhere in the middle in terms of rates. The really good deals are the online banks that I've never heard of.

[michaeljc70]

Yes, I've used them multiple times. They will probably sell the mortgage within weeks of closing so they won't handle the servicing.

Is that bad? (Serious question -- I don't know a lot about this.]

Thanks for the other replies. Someone mentioned Capital One 360. I'm not surprised that they worked out ok; I hadn't even thought of them as an online bank! In this case, Cap One 360 is somewhere in the middle in terms of rates. The really good deals are the online banks that I've never heard of.

I assume you mean selling the mortgage. No, it isn't bad. It is very common. I think the vast majority of mortgages are sold. They sell the mortgage and that gives them the $$$ to issue another mortgage.

[JDCarpenter]

Yes, I've used them multiple times. They will probably sell the mortgage within weeks of closing so they won't handle the servicing.

Is that bad? (Serious question -- I don't know a lot about this.]

Thanks for the other replies. Someone mentioned Capital One 360. I'm not surprised that they worked out ok; I hadn't even thought of them as an online bank! In this case, Cap One 360 is somewhere in the middle in terms of rates. The really good deals are the online banks that I've never heard of.

I assume you mean selling the mortgage. No, it isn't bad. It is very common. I think the vast majority of mortgages are sold. They sell the mortgage and that gives them the $$$ to issue another mortgage.

We've used online mortgage lenders many times and have had good results. (Most recently with Cardinal Financial, which was resold twice by the time of the second payment) One thing that I do, whether brick and mortar or online lender, is to avoid having an escrow account. My subjective belief is that it helps to minimize the chance of dropped balls as the paper is sold multiple times or securitized....

[R2D2]

Aha, good advice, JDCarpenter. Thanks.

[Eurookat]

And as a side question, do credit unions typically sell your mortgage loan? We used a traditional bank and it's been sold 3x thus far. Our next loan will be with a CU.

[MikeG62]

Not sure I would call them "online", but we used Pentagon Federal Credit Union in the past for a HELOC and I have several friends who have used them for mortgages. May be worth a look - at least to compare rates. I just looked and they are at 3.875% with zero points.

I agree with JDCarpenter about not escrowing - if the bank/mortgage company is willing to agree to it. Personal experience with Wells Fargo back in 2003. They screwed up my escrow and I called and insisted they allow me to handle the real estate taxes and insurance and kill the escrow. They did agree to it. I had a lot of equity in the house (probably around 75%) and that may have played a role in their agreeing to it.

Lastly, if you can find a place that is more likely to hold the paper than not, that would be a big plus if I were in your shoes. The last thing you need is issues with the processing of payments and handling of the loan account (including the escrow).

[pangea33]

If it's of any help, we ended up going with GoodMortgage who then sold it to Chase. I think we found them through the MortgageProfessor.

I initially contacted a local mortgage broker when trying to buy my house. They put me through a bunch of hoops but were moving very slowly and didn't inspire confidence. Went through lendingtree.com and had 5 eager contacts within 30 minutes.

Wasn't familiar with the lender I chose, but it didn't matter much. My loan was sold before I even made the first payment.

Incidentally, it was to Wells Fargo. Not a big fan, but I'm locked in at a pretty good interest rate for 30 years. Hopefully I don't have a bunch of checking accounts opened without my knowledge!

[vkfu]

I actually went through First Internet Bank for both a refinance and a purchase. Everything turned out well, but they were unfamiliar with a local custom regarding title insurance. Once this was straightened out it was smooth sailing. I would have no problem using them or another online bank again.

[ArmchairArchitect]

Use Zillow Mortgage Marketplace...I've used it 3 times so far, with great success.

You put in all your specifics, then lenders provide instant quotes/bids. You can then sort by APR, and pick a lender that has good reviews on Zillow.

For title insurance, definitely use Title Forward (www.titleforward.com)...no BS fees like all local title companies charge.

[poker27]

I refinanced last year with an Internet bank, aim loan. I was very, very skeptical at first. They had low fees and a much lower rate than any local offerings. I closed on time, and I did not encounter any surprises. Communication was ok, I had a few questions that while eventually got answered, concerned me for a day or so. Overall I am happy with the process. They also did not sell my loan and are handling the servicing, so far so good.

However, I am not sure if it had anything to do with aimloan, but my identity was stolen within 30 days of refinancing. It could have very well been bad timing, but with all of the personal information going back and forth, it leaves me with questions/ a slight bad taste in my mouth