Ditech : Will Online Mortgage Lenders Replace Traditional Banks?

The Internet has changed our lives in more ways than we can imagine. The Web provides a convenient, fast, comprehensive source of information that we have very quickly embraced as our "go to" source for whatever it is we need in a pinch. The emergence of sites such as Amazon and eBay have made it very easy to buy merchandise and now, more than ever, financial products. One of the fastest growing businesses on the Web is that of companies that provide mortgages.

In the past, anyone who wanted to buy a home had to get in the car with a pile of financial documents and visit their local lender. In small towns, there may have been only one lender, and prospective buyers were at the mercy of that lender's terms, rates and conditions. That is no longer the case. The emergence of large lenders such as E-Loan or Ditech has made it possible for anyone with an Internet connection to obtain a mortgage or home equity loan at a competitive rate.

There are several reasons why Internet lenders are seeing increased business:

# Convenience - The ease of shopping for a loan from the privacy of your own home is something that many buyers appreciate, especially if they have been driving all over the place looking at houses.
# Variety – Some online lenders may offer a wider variety of mortgage products than local lenders. This may be especially true if you live in a small town.
# Speed – Many online lenders can determine quite quickly if a borrower will qualify for a loan.

Some things, such as a property appraisal, cannot be done online, of course. Online lenders work with a variety of local appraisers in order to verify that the property in question is valued sufficiently for the desired loan. Online lenders also have staff members available to speak by telephone with customers who do not wish to provide personal or financial information over the Internet or who may have problems with the loan process that need to be discussed with a real person.

While the business of mortgage lending is not likely to be completely taken over by online lenders, the Internet has certainly added some variety and convenience to the process of shopping for a home loan. As time goes on, using the Internet for loan comparisons will probably become a standard part of shopping for a loan.