Mortgages - Shopping for Loans Online

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Peter Carroll, the acting assistant director for mortgage markets at the newly formed Consumer Financial Protection Bureau, suggests that borrowers begin the process by reading the fine print of each site they choose to work with. “Understand the terms of use and privacy policies,” Mr. Carroll said.

If you are shopping for loan rates on sites like Bankrate.com or LendingTree, also be sure to read their “frequently asked questions” section, industry experts say — and recognize, too, that these sites are businesses that make money by working with lenders, via a pay-per-click formula or by generating leads.

If you provide personal information, including your credit score, find out how widely that material will be circulated. As Mr. Carroll put it, “Understand that many lenders may be contacting you.”

At Zillow Mortgage Marketplace, the average number of rate quotes customers receive is 20, while at LendingTree it is 3 to 5, according to both companies.

Most sites provide rates and other information only from lenders that are signed on as their customers. One exception is Bankrate.com, which offers one table that includes its lending clients as well as the five largest banks and other lenders in some 600 local or metropolitan areas.

The online mortgage marketplace has become increasingly popular for borrowers researching loan rates and options. Some 1,200 mortgage-related Web sites are tracked by Experian Hitwise, and the top seven sites drew more than 22 million total domestic visits in April, up 24 percent from a year earlier and 74 percent from April 2010. The numbers are expected to grow with the wider use of smartphones and other devices.

Doug Lebda, the chief executive and founder of LendingTree.com, noted that for the last three years, the difference between the highest and lowest rates available was “wider than it has been in recent history,” making comparison-shopping even more important. But he also pointed out that the advertised rates are “indicative rates but they’re certainly not offers.”

Mr. Lebda suggested that borrowers also consider the mortgage initiation fee and closing costs.

As they navigate through online mortgage sites, borrowers will need to find out the sites’ criteria for matching them up with lenders, and whether lenders can pay for higher placement. That’s where reading the fine print may come in.

“Make sure you feel you’re in control,” said Erin Lantz, the director of Zillow Mortgage Marketplace. That way you can give your personal information out to lenders of your choice.

And if a credit report is pulled by lenders, Mr. Carroll added, find out “what rights do they have to that information besides evaluating that loan request?”

Borrowers will also want to learn about quality control at the sites they visit. Bankrate.com, for example, has a 40-person quality-control department that investigates consumer complaints and does what is known as “mystery shop” on various sites. LendingTree says it relies partly on consumer ratings and reviews, as does Zillow Mortgage Marketplace. It has more than 10,000 reviews to date, Ms. Lantz said, adding that the reviews are also vetted to ensure they are not from any lenders.

Mortgage shopping sites will often advertise that they are making comparisons easier and faster for borrowers, but that could be counterproductive, said Sue Berkowitz, the director of the South Carolina Appleseed Legal Justice Center, which advocates for greater disclosures by these companies. “It should be time-consuming, and done with analysis.”

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Mortgages - How to Pump Up Your Credit Score

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A majority of banks are less likely to offer loans to people with a FICO credit score of 620 and a 10 percent down payment than they were in 2006, according to the report. Lenders were also less likely to do so even for those with a score of 720.

Such stricter standards have drawn the attention of Ben S. Bernanke, the chairman of the Federal Reserve, who last week told a bankers group that “current standards may be limiting or preventing lending to many creditworthy borrowers.”

For those with lower credit scores, the math is stark: A borrower with a credit score of 720 can expect a rate of 3.70 percent on a 30-year, $300,000 fixed-rate mortgage, according to myfico.com, while someone with a score of 620 to 639 can expect a 5.07 percent rate — or an extra $242 per monthly payment.

“If you don’t have good credit, you’re not going to get that crazy low rate,” said Deborah MacKenzie, the director of counseling at the Housing Development Fund, a nonprofit group in Stamford, Conn. But she and other experts said there were tactics that consumers could use to raise their scores.

First, though, it is worth noting that median credit scores are rising, as people reduce debt and spend less in tight economic times, said Joanne Gaskin, the director of product management and global scoring at FICO, the provider of one of the most popular credit scores used by lenders. Some 18 percent of Americans now have scores of 800 to 850, while 15 percent are below 550, according to FICO data. Through “good behavior,” Ms. Gaskin said, you could raise your credit score by as much as 100 points in a year.

Often lenders will review your scores from the three big credit agencies, and they use the middle number to evaluate you. “That becomes your risk number,” said Tracy Becker, the founder of North Shore Advisory in Tarrytown, N.Y., a national credit score specialist.

Start by obtaining your three credit reports (available free once a year at AnnualCreditReport.com, or call 1-877-322-8228), and study them carefully for errors or omissions. If you think your score labels you as a higher risk, Ms. MacKenzie suggests signing up for a first-time homeowners class through a counseling agency certified by the federal Department of Housing and Urban Development.

According to FICO, the two biggest factors in your credit score are your payment history, which accounts for 35 percent of the score, and the amounts owed, accounting for 30 percent.

Knowing that, Ms. Gaskin said, an effective way to raise your score is to reduce your balances on credit cards. She notes, however, that if an account is in collection, it is too late to improve your credit score by paying it off. The notation that an account is in collection is what lowers the score, she said, so consumers may get more mileage by paying down active credit-card balances and other debts first.

Though mistakes and bankruptcies may stay on your credit report for seven years, lenders will generally be more likely to overlook late payments that happened two or more years ago than more recent ones, Ms. MacKenzie said. “A late payment that occurs this month when you’re applying for a mortgage is deadly,” she said.

Another way to bolster your credit is by asking creditors with whom you have a good track record to report to a credit agency, Ms. Gaskin said. That could include a landlord or a utility.

Improving your credit could take three to four months, or it could take as long as 18 months. “It isn’t an easy fix,” said Carol Yopp, a program manager for the Long Island Housing Partnership and a former mortgage underwriter. “Don’t expect it to happen overnight.”

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