The Truth About Instant Mortgage Quotes

What is an instant mortgage quote and how do I get one? Is it really an instant offer from lenders? How can they give me a quote so fast without even reviewing my finances?

These are common questions about mortgage shoppers, and I can certainly understand the confusion. You see advertisements for instant loan quotes all the time. But it makes you wonder ... how can a mortgage broker or lender offer a quote so fast, when they need to review your financial situation first?

The answer is two-fold:

1. There is no such thing as a truly instant mortgage quote.

Even a basic, cursory review of an applicant's finances will take some time. So the only way to make the process instantaneous is by offering "blanket" quotes to everyone, regardless of their qualifications -- and that would be a waste of everyone's time. Sure, this initial process can be pretty quick, thanks to the Internet. But it's just not instant.

2. The initial quote is far from approval.

It's also important to realize that this kind of up-front mortgage quote is based on limited data. So it's not the same as a pre-qualification or pre-approval. In other words, just because you get an instant quote for a certain loan amount and interest rate, it doesn't mean you'll receive final approval for that amount. This will make more sense when you read the series of events described below.

The Online Mortgage Quote Process

When you hear the word instant used to describe this process, it usually refers to online quotes and the companies that provide them. This truly is one of the fastest and easiest ways to get the ball rolling. Here's an overview of how the process works:

• Step 1 - Choose an online lending website. Here are some security considerations to keep in mind.
• Step 2 - After reviewing the security recommendations provided above, provide the requested information on the mortgage website. Typically, this will be a short web form asking for your name and contact info, your desired loan amount, size of down payment, desired mortgage terms, etc.
• Step 3 - Once you have submitted the information needed for the online mortgage quotes, you will eventually receive some offers from brokers and/or lenders. This may come in the form of emails, online messaging through the lending website, or a combination of the two.
• Step 4 - You would then review the quotes presented and see which one offers the best interest rate and terms. Just keep in mind you may not actually qualify for those terms -- it's just an initial offer based on the information you provided.
• Step 5 - Based on the mortgage quotes provided, you would choose a broker or lender and follow up with them by email or phone.
• Step 6 - Eventually, you would go through a more detailed review. The lender will request financial documents such as your W-2 forms for the last two years, pay stubs, etc. They will also pull your credit score to see where you stand. You'll eventually be pre-qualified for a certain loan amount, and you can use that pre-qualification letter when house hunting (it shows the seller that you are capable of buying their home).
• Here are some of the things you should do before you apply online for a loan.
  

This is the basic process that takes place when you request the so-called instant mortgage quote. Your actual experience may differ from what I've outlined above, based on any number of variables. But at least now you have a general idea of what takes place.

Not Instant - But Still Convenient!

When people email me asking about home loans, I usually refer them to one of the big online lender websites. I do this because it's a convenient way to initiate the mortgage application process. As you can see from the outlined steps above, it doesn't take much to get started.

It's also a convenient way to compare mortgage quotes / offers from more than one lender. In some cases, you can receive information from up to four lenders at once -- and you can get it by the end of the day, straight to your email inbox.