Online mortgage tools help all borrowers regardless of incomeby Marcie Geffner
If you’re shopping for a mortgage, online tools could help you get lower costs, fewer surprises at closing and higher long-term satisfaction with your choice. In fact, if you don’t look online for mortgage rates, a lender or real estate agent, you might be selling yourself short.
That’s according to a new Fannie Mae study about how consumers leverage technology in buying a home or obtaining a mortgage.
Online tools, like a mortgage calculator, can help you better understand mortgage terms and costs and enhance your ability to compare loan terms from multiple lenders simultaneously, and, the study suggested, those opportunities can yield big benefits.
The study also found “a particular gap” in the degree to which higher income and lower income consumers attained the benefits of online loan-shopping.
Higher income borrowers
Higher income borrowers were more likely to:
- Select a lender based on how competitive the offer was
- Rely on their own calculations and make more extensive use of “how much can I borrow?” functions
- Say the ability to shop and compare multiple lenders’ offers simultaneously would make the loan process easier
Lower income borrowers
Lower income borrowers were more likely to:
- Rely on advice from real estate agents, mortgage lenders, family members or friends when they choose a lender or mortgage
- Say easier-to-understand loan terms and costs could make the loan process easier
- Forty-eight percent of higher income respondents said they’d received an online mortgage rate quote. Only 20 percent of lower income borrowers had done so.
- Twelve percent of higher-income respondents said they’d used online tools or applications to determine how much they could borrow to buy or refinance. Only 5 percent of lower income borrowers had done so.
- Higher income borrowers used online shopping approaches about twice as frequently as lower income borrowers.
- All income groups wanted to use the Internet for mortgage shopping more than they currently do. That suggests online technology will be increasingly important in the process in the future.
Mobile and mortgages
Steve Deggendorf, director of economic and strategic research at Fannie Mae, said in a commentary that the study findings “suggest opportunities for online tools to improve the ability of all borrowers to shop for a mortgage.”
Survey respondents were more likely to use a personal computer for mortgage shopping than a smart phone or tablet. But mobile technology could gain ground in the future, Deggendorf suggested.
“Mobile tools hold the promise of offering real-time information and education where and when it is needed, for example, when visiting homes for sale or shopping for a mortgage in a face-to-face setting,” he wrote.
The study was based on data from Fannie Mae’s monthly national housing survey, which polls more than 1,000 U.S. adults each month.