With mortgage rates at historic lows, now may be a good time to buy or refinance a house, and the Internet has made it easier than ever to shop for a mortgage.
There's no longer a need to pound the pavement going from one bank to another comparing rates or to spend hours on the phone supplying loan officers with information when you can get quotes from multiple lenders by filling out one application online.
But shopping online can sometimes means providing your Social Security number to a website in order to get a mortgage rate -- a process that disturbs some consumers and industry experts.
"There are probably eight to 10 criteria that are required to accurately price a mortgage, and a Social Security number is not one of them," said Rick Allen, chief financial officer at Mortgage Marvel, a Milwaukee-based company that provides online quotes for mortgage rates and closing fees.
Not all mortgage websites ask applicants for Social Security numbers and other detailed personal and financial information.
Mortgage Marvel recently conducted a side-by-side comparison of the four leading mortgage-lender websites -- Bankrate, Zillow, Mortgage Marvel and Lending Tree -- and found that Lending Tree is the only one that asked applicants to provide a Social Security number to receive a mortgage rate.
Megan Greuling, communications manager for Lending Tree, based in Charlotte, N.C., said the company also has mortgage-rate forms that do not require Social Security numbers, but she said when customers do provide the numbers it allows lenders to give them customized actual mortgage quotes.
"If you look at rate tables online for different sites, those rates do not reflect the consumer's borrowing profile," she said. "Providing a Social Security number on the form helps to avoid the whole bait-and-switch maneuver where borrowers expect one rate and end up with another one that is much higher."
Greuling said Lending Tree understands that some people are hesitant to provide a Social Security number, but she said the website is on a completely secure platform. Lending Tree collects data that people provide on its website and sells the information to its network of 300 mortgage lenders who compete for the customer's business.
"We don't sell the information for any other reason than to allow the lenders to create a customized quote," Greuling said.
Though stricter mortgage guidelines were put in place because of the housing crash, mortgage applications are up 53.4 percent from a year ago, according to the Mortgage Association in Washington, D.C. Mortgage Marvel reports that online mortgage applications on its site from January to June are up 80.18 percent compared to the same period last year.
With 30-year fixed mortgage rates currently averaging 3.62 percent, according to mortgage buyer Freddie Mac, home loans are still among the cheapest forms of debt. The average rate on the 15-year mortgage, a popular refinancing option, is 2.89 percent.
Although online mortgage shopping can often be more convenient, brick-and-mortar mortgage brokers still play an important role in the home lending business.
"The quote we give will be 100 percent accurate," said Art Basmajian, owner of Barron Mortgage in Blawnox, Pa. "An online service a lot of times will not ask the right questions. If a broker doesn't ask the right questions, the rate they quote could be totally off."
According to the comparison study, Zillow is the only mortgage shopping site that provides lender ratings, while only Zillow and Bankrate allow consumers to compare multiple mortgage products in a single search. Mortgage Marvel and Zillow offer an email-alert service to loan applicants. All four websites offer immediate real-time quotes.
Allen said mortgage shoppers will need to know their credit score before filling out Mortgage Marvel's online application for a mortgage-rate quote, but that information does not compromise the person's identity because without the borrower's date of birth or home address, a cyberthief would still not have enough information to find the borrower.
"With a transaction the magnitude of a mortgage, you definitely want to shop," Allen said. "You really want to compare interest rates, points and fees."
Email Tim Grant at firstname.lastname@example.org.