How Can Online Mortgage Sites Help Me Get a Bad Credit Mortgage?

By Gina Pogol
Mortgage Credit Problems Columnist

Glen Asks: Dear Gina, I'm looking for a bad credit mortgage but I am worried about doing it online because I heard that it can cause credit problems. I don't want a bunch of lenders pulling my credit and dropping my credit score. I also have been told that I could end up getting calls from lenders that don't even lend in my area. Can you tell me if this is true, and what the advantages and disadvantages of using mortgage shopping sites are?

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Gina Says:

Dear Glen,

You are right to be concerned; any time you do business online you want to exercise some common sense. But shopping for a mortgage online is faster and easier than making a zillion phone calls, and smarter than just working with whomever your real estate agent recommends. When getting mortgage quotes, you need to be aware that quotes obtained today can't be realistically compared against quotes obtained a day or two later. Mortgage rates change often, sometimes more than once a day! To make meaningful comparisons, you should obtain quotes as quickly as possible. That's easier to do online.

Here are a few pointers: First, you shouldn't have to provide your Social Security number to get a mortgage quote. Don't work with sites that require it; you don't want to be an identity theft victim. Understand, however, that to issue a Good Faith Estimate, the lender does require more personal information.

You want to work with mortgage lenders that are licensed in your state. The mortgage lenders on this site are licensed. You don't want to be contacted by lenders not equipped to so business in your area. Understand that lenders who contact you pay for the privilege; they wouldn't want to pay for a contact with someone they can't do business with. It is unlikely that you'd be called by someone who doesn't lend in your area.

When shopping for a bad credit mortgage online, you should be as accurate as possible when answering the few questions on that little inquiry form. For example, take some time to get a close approximation of the value of your home if looking for a refinance. Your property may not be worth as much as it was a few years ago; there are websites that can help you ballpark a home value. Ditto with your current mortgage balance. The two biggest factors that influence your mortgage rate are the loan-to-value (your mortgage balance divided by the property value) and your credit score (sometimes a single point, say, a 679 score versus a 680 score) can mean paying an extra point in loan fees.

Shopping online isn't for everyone, but if you need to cover a lot of ground quickly it could be for you.

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