The American quest for material goods ebbs and flows with the times, but the desire to own a home is deeply embedded in our psyche. Witness the number of titles in Barnes and Noble’s Real Estate section, 218 ranging from Home Buying for Dummies to How to Get a Mortgage in 24 Hours. Most are filled with information on the vagaries of the mortgage process, since for most readers it’s easier to find the right home than to pay for it.

What’s the opportunity for online mortgages? According to the Mortgage Banking Association, there are 1,300 mortgage brokers online ranging in size from one-person shops to behemoths like Countrywide (see p. 9). All are pursuing the estimated 10% of Web users planning to obtain a mortgage in the coming year1, and/or the 9.3% of Web users planning to open a home equity loan or line of credit during the next 12 months.

On the Web, the whole area of home ownership—from buying, to financing, to maintaining—is spectacularly disorganized. It’s messy; it’s unmanageable; it’s impossible to categorize; it’s wonderful. Exactly the primordial soup needed for intelligent life to evolve. Sit down at your computer some rainy Saturday and pretend you are buying a home in your area and see what you find. You’ll probably come up with a few dozen personal business ideas in the process. But based on the slow start of electronic commerce on the Net, I don’t recommend quitting your day job quite yet.

Here are some of the good things on the Web today:

• up-to-the-minute rates for every conceivable loan program…with links to historical rates
• loan calculators, some Java-based, that allow you to quickly determine how much home you can afford, compare payments between different loan programs, analyze cost savings with a refi, etc.
• mortgage loan applications of all shapes and sizes from complete 1003 applications spread out over 20 computer screens, to 10-line mini-applications
• links to Realtors, and/or Realtor search engines
• links to homes-for-sale listings
• intelligent cross-selling of home equity loans and other bank products
• detailed home buying and financing information
• glossaries of mortgage terms
• e-mail loan status reports
• e-mail rate update services
• discounts for submitting loans online
• fast (24-48 hour) loan approval
• rate guarantees

And then there are the not-so-good aspects of Web-based mortgage lending:

• poorly organized information; don’t just dump all your mortgage documentation on the Web and let applicants slog through it; information needs to be effectively nested and when it gets beyond a few dozen pages, it should be indexed with an on-site search engine and/or detailed site map
• not enough information, especially empty “under construction” content areas
• too little integration with live mortgage reps; most Web users will need to talk to a Real Person before committing to a loan application, so put your 800 number on every page
• no clear benefit for applying online; provide incentives, even if it’s only $100 off closing costs
• unknown companies who do nothing to explain why they should be trusted with a $150,000 mortgage application (for an exception see American Finance OBR 4/96 p. 10)