Realtors Offer Computer Mortgage Shopping : Loans: Some believe the service is the wave of the future, but others point to some potential pitfalls.
A growing number of real estate firms are offering in-house computerized mortgage networks, a high-tech loan-finding service that some experts say is the ultimate in one-stop shopping for home buyers, but others contend has hidden pitfalls for borrowers.
“It’s the wave of the future,” said Norm Flynn, president of the National Assn. of Realtors. “I’d say that within five years most real estate companies will have some type of computerized mortgage system right in their own offices.”
At least half a dozen firms--including Prudential Real Estate Affiliates, Citicorp and American Financial Network--offer some type of computerized mortgage service.
Here’s how a typical system works:
A buyer selects a home and returns to his realtor’s office to search for a loan. The realtor types in several pieces of information into a computer, including the sales price of the home, the down payment and the size of the necessary loan.
The computer then prints out a listing of the different types of loans and terms that are available from lenders who are on the computer’s database.
For example, the printout might show that one lender is making fixed-rate loans at 9 3/4%, while all the others are demanding higher rates.
“Convenience is the major factor, plus the fact that you’re surveying hundreds of different loan programs offered by dozens of different lenders in order to get the best terms,” said John Pembroke, president of American Financial Network, a company that has installed its system in real estate offices across the nation.
But while computerized mortgage networks can make shopping for a loan much easier and faster, they have their drawbacks.
Perhaps most important, experts say, would-be borrowers need to remember that not every lender is on the computer’s database. You might wind up choosing the best loan that the computer locates, but an even better loan might be offered by another lender who doesn’t take part in the program.
In addition, some of the computerized mortgage firms don’t provide important pieces of information that can affect how much money you pay over the life of the loan.
For example, you might opt for a 10% loan and--only after receiving the loan documents and paying a non-refundable fee of several hundred dollars--find out that the loan has a stiff prepayment penalty or some other potentially costly drawback.
As a result of these drawbacks, most experts say it’s OK to use the computerized mortgage networks to supplement your search for the mortgage that’s right for you--as long as you also pay a few personal visits to banks, savings and loan associations or mortgage brokers.
“Computerized services are a great convenience, but they’re not the be-all and end-all when it comes to looking for the right mortgage,” said realtor Flynn. “Go ahead and see what the computers have to offer, but do some checking on your own, too.”
Would-be borrowers who know how to use a personal computer may be interested in “MACC-TRAC,” a new software program offered by Mortgage Analysis Computer Corp. in Engelewood, Colo.
The program lets prospective borrowers analyze and compare the cost of loans based on data the borrower gets from different lenders. You can punch in the interest rate offered by one lender and--with just a few keystrokes--see how much interest you would pay over the life of the loan, how much of your monthly payment would go toward principal and interest in any given year, and other financial information.
In perhaps the program’s most useful function, you can enter information on up to 15 different loans, press a button, and the computer will automatically select the loan that will be the least expensive.
The program, which has a money-back guarantee, sells for $49.50 plus $5 for shipping and handling. More information can be obtained by writing to Mortgage Analysis Computer Corp., 6059 S. Quebec St., Englewood, Colo., 80111. The company’s toll-free phone number is (800) 444-7071.
TOP 10 LENDERS IN L.A. COUNTY Following are the top 10 lenders for all commercial and residential real estate activity in Los Angeles County for January through October, 1989.
Lender Dollars Loaned Market Share 1. Security Pac National Bank $2,886,355,966 5.19% 2. Great Western Bank FSB 2,580,169,137 4.64 3. Home Savings of America 2,479,820,075 4.46 4. Bank of America 2,159,054,221 3.88 5. Glendale Federal Bank 1,429,722,996 2.57 6. Wells Fargo Bank 1,316,126,426 2.37 7. California Federal Bank 1,257,409,402 2.26 8. First Interstate Bank 1,013,650,545 1.82 9. Home Federal S&L; 941,115,533 1.69 10. American Savings Bank 902,708,033 1.62 Total Market 55,593,845,604 100.00
Source: TRW Real Estate Information Services
