E-Mortages: The New Way to Get Approved


The Internet has changed the way people do business, apply for jobs and handle personal finances. Now, the Internet is changing the way people apply for mortgages.

E-mortgages are online mortgages offered through certain banks and lenders, and first appeared in the late 90s.

E-mortgages weren't always a homebuyer's first choice for financing a home. But, in the last year the popularity of e-mortgages has increased. In fact, the SeattleTimes.com reports that 2.5 percent of all mortgages transactions will take place online this year.

"We've been doing mortgage business online since 1999," says Bill Emerson, CEO of Quicken Loans. "Early on, adoption was weak because people wanted to be sure they knew what they were doing. [Now] we're the No.1 online lender. It continues to get more popular."

What's more, the quick approval process and the elimination of cumbersome paperwork spurred the popularity of this service. Now, instead of waiting months to have a traditional mortgages approved, e-mortgages are approved in two to three weeks.

In addition to the convenient approval process, Lucy Duni -- Director of Consumer Education for TransUnion?s TruCredit.com -- attributes e-mortgages popularity to the convenience and cost flexibility of the product.

"E-mortgages are convenient, especially for the military community, you can do it any time day or night. And there are little to no costs associated with applying for them," Duni says.

According to Quicken Loans and Yahoo Finance other advantages include: Access to highly trained experts who can help determine the right loan for your financial situation; safe, secure online transactions on password protected, encrypted websites; and the ability to correct mistakes immediately.

However, in order to be approved for an e-mortgage you must have good credit and a low debt-to-income ratio. Some banks and lenders, such as Quicken Loans, do not require customers to have a minimum credit score to qualify, but it's always ideal to know your current credit score and make sure it's in good shape.

"You want to aim for a score above 650, and some e-mortgage companies look at the debt-to-income ratio in addition to your credit score, so you want to keep your debt below 30 percent of your income," Duni says.

"Additionally, if you apply online you should only do this if you're serious, because that inquiry will show up on your credit report," she adds.

Multiple inquiries can reflect negatively on your credit report, so it's important to be prepared before you apply for an online mortgage.

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