How to Get Home Loan Quotes Online

Reader question: "I was wondering how to get home loan quotes from the Internet. Is it as easy as filling out a form on a website, or is there more to the process than that?"

Yes, it is that easy. But there are several things you should know before you start requesting home loan quotes online. So let's talk about what happens when you fill out a loan request on a lender's website.

Actually, before we even get to the process, I want to talk about the terminology we are using here. It will help to cover some basic terms before we begin, just to make sure we're on the same page.

What is a Home Loan Quote Anyway?

This is a generic term that can mean a couple of different things. In general, any time you ask to be pre-approved by a mortgage lender, you are requesting a home loan quote from them. The lender will review your financial situation (your credit score, your current level of debt, your income, etc.), and based on this information they will tell you how much they are willing to lend you.

So a home loan quote is basically the same thing as an application or a pre-approval request. Regardless of what you call it, you are asking the lender to tell you how much you are qualified to borrow.

As you've indicated with your question, you can actually get home loan quotes online these days. This usually happens in one of two ways. You will either request a quote directly from a particular lender, or you will get multiple quotes through a network of lenders. The second option is often referred to as an "aggregator" website, because it will aggregate (or gather) home loan quotes from several different sources.

In truth, the online process is just meant to get the ball rolling between you and the lender. The lender can't really pre-approve you until they have received certain information from you, as we talked about above. They won't ask for all of this information on the website, because that would be far too cumbersome for the potential borrower. Instead, they ask for some basic information in order to provide you with a preliminary quote.

Just realize there could be a big difference between this initial quoted amount and the amount you are ultimately approved for. For example, you might go online to get home loan quotes and be told you can qualify for up to $300,000. But later, after the lender performs a more comprehensive review of your finances, they may say you are only qualified for $270,000. Something to keep in mind as you move forward.

Establish Your Budget Before Getting Quotes

The next thing I want to talk about is your budget. Before you start talking to lenders and filling out forms for mortgage quotes, you need to have a home-buying budget firmly established. Specifically, you need to know how much you can afford to spend each month toward your home loan payments. Some people think this is what the home loan quote process is all about, but that's not the case at all. When you get a quote from a lender, it only indicates the amount the lender is willing to give you. It doesn't indicate the amount you can actually afford to pay each month. These are two separate things, and you should treat them as such.

So before you start gathering home loan quotes online, you need to establish a monthly spending limit for yourself. You can learn how to do that in the article below:
How much house can I afford to buy?

Good Credit = Home Loan Success

It's also a good idea to check your credit before you start getting quotes from mortgage lenders. Your credit score is one of the top three factors that will determine (A) whether or not you get approved for a loan, and (B) what kind of interest rate you get. The last thing you want to do is request a home loan quote from a lender that knows more about your finances than you do. This is what happens when you don't know your credit score, because the lender will check that score as soon as you submit an application or a pre-approval request.

Checking your credit score will also help you determine if it needs to be improved. Some people don't realize they have bad credit until they start asking for home loan quotes online, which is the wrong way to find out about it. You should be proactive and find out where you stand now, before you start shopping for mortgage rates. That way, if you need to improve your score, you can take the appropriate steps in that direction. We have plenty of advice on this website to help you raise your credit score, and you can find that in our credit library.