Home equity loans and online application problems

Rather than driving all over town or all over the country to shop for houses, probable buyers can now just surf through a selection of homes using their Web browser from the comfort of their own home. The Internet makes it easy to shop for a home, but a buyer can just as easily search for a home loan or mortgage online as they can for a house itself. The growth of the Web has made it easier than ever to purchase or sell a home.

All one has to do to shop for a loan or mortgage on the Web is to find some mortgage Websites using a search engine and compare rates. The market for houses, while slowing down a bit, remains strong and will continue to do so as long as people need a place to live. Web buyers should be careful - how you go about searching for a loan or mortgage online can greatly affect the rates offer to you and can even have a negative effect on your credit score or report. Just as there are thousands of Web sites devoted to the sale of real estate, there are nearly as many sites dedicated to selling home loans.

The reason online buyers need to be cautious is the difference between how you make inquiries about mortgages in person versus how you inquire about loans online. If you go into a mortgage company or bank and ask about interest rates, you can offer some general information about your income and previous borrowing history. If the financial institution knows your history of financial transactions, they can offer some general information about their mortgage rates. If you are serious and are pleased with what you have heard from a certain financial institution, you can properly apply and obtain an accurate estimate regarding prices. You can get a general idea of the amount you will have to pay for a loan in terms of interest rates, points and closing costs without really needing to apply for a loan or having the lender run a credit check on you.
 

If you apply for a loan online, the situation is different. Many lenders will then respond to an online quote with a telephone call from a representative. Many, if not most Websites have automated inquiry mechanisms that handle the interest quotes. Once the lender has evaluated your credit report, which takes only a few minutes, they can contact you with an offer of a price. So that you might get an online quote, you will have to complete a form that requires you to provide your Social Security number to the mortgage company, which is, in fact, agreeing to let the lender run a credit check on you when you fill out the form.

A number of separate inquires over a prolonged period of time can actually lower your credit score! There is no problem in having a credit check completed; many people do that all the time. A lot of inquires about the same type of loan that occur within a two week time period are often treated as one inquiry by the credit agencies. If a lot of credit inquiries are staggered over a period of time, those inquiries may be viewed as separate inquires. Credit scores can be damaged from multiple queries because people who apply for a lot of loans or credit in a brief period of time are typically seen by financial institutions as "too eager."

Probable damage to your FICO score should not keep you from looking for a loan on the Web.