Let us first discuss the positive points that are associated with online mortgage lending. The first advantage is that it is increasing the competition in the mortgage market, which could lead the traditional mortgage lenders to reduce their rates. Also the online mortgage lenders have made the process very simple. One just has to fill a form with some personal and financial information to find out whether the person is eligible for the loan or not. Since the process is simplified, in most cases, the mortgage lending fees are much lower than the traditional mortgage lenders. The application fees could be totally waived off.

The convenience of sitting at the PC at home and transacting need not be spoken about. With online mortgage lending, the borrower can get the mortgage with just a few simple clicks of the mouse and inputting certain information. The hassle of running around from one lending office to another and holding discussions with the loan officers is not involved. Also, the person is able to compare rates of various online mortgage lenders and see what is best suited to him/her. The borrower could get a mortgage program with a lower rate of interest and with flexible repayment terms.

Borrowers with bad credit histories could find some willing lender in an online search. Some lenders would provide mortgages to people with bad credit histories with the same facilities as to those with good ratings, though such lenders are very difficult to find. They may charge higher rates of interest from the bad credit borrowers, though.

Finally, online mortgage lending enables the borrower to just switch over to another lender in case his/her mortgage application has been rejected from one. There is valuable time saved, and also money when one considers the commuting from one lender to another.

With all these features, it might seem that online mortgage lending could be the way to go. But there are some limitations and negative points associated with online mortgage lending which one needs to be cognizant of.

One thing to note is that all lenders are not certified to conduct their businesses in all the fifty states of the US. Hence one might find a good-looking mortgage, but the lender would not be certified to do business in that particular state. Then there are also illegitimate businesses that one needs to be wary of. There are scam operators who could take the initial fees from several expectant borrowers and then disappear into thin ice with all the money. Since the business was online, it could be very difficult to trace them. Then there are other associated scams such as using information such as credit card and social security numbers illegally. These scams could be the handiwork of hackers who are always trying to get access to such sites over the net.

There is no government institution to which online mortgage lenders are accountable. So, in case of a scam there is nowhere for the victims to go. People willing to take the risks of online mortgage lending should be aware that it is not regulated by federal laws.

If the online mortgage lending works out, then it could be a worthy idea saving both time and money. But the borrower must be wary and must do some background search on the company before just keying in vital information of his/her finance.