Conventional wisdom has always held that if you buy through the Internet, you should pay less than if you go through regular retail channels.

Unfortunately for the consumer, that so-called wisdom hasn’t always rung true. Instead of discounts, consumers often end up paying as much or more than they’d pay elsewhere.

Recently, Countrywide Home Loans introduced the “Gold Credit” mortgage, a loan product only available through the Internet. Eligible consumers can receive a discount of up to 1.25 points on their mortgage, which translates into a savings of $1,250 on every $100,000 of your loan. In addition, you pay few, if

According to Cameron King, executive vice president of Countrywide’s Electronic Consumer Division, the Gold Credit mortgage allows home buyers and owners the comfort and convenience of applying for a home loan from their own home, 24 hours a day, and yet allows them to tap into one of the cheapest loans available in the open market.

Consumers need only fill out an electronic application, which asks for basic financial information, such as name, address, social security number and a credit card reference. The borrower will be able to get preapproved for his or her loan within 24 hours, with the interest rate guaranteed for up to 75 days.

But King stressed that the loan was not for everyone. “You need to have excellent credit and the ability to put down at least 20 percent of the purchase price of the home in cash in order to apply for this loan. A large percent of the home buying or refinancing population meets these criteria.” But many first-time home buyers, including those who have credit problems or who can’t meet the down payment threshold, will have to look elsewhere.

Since Countrywide’s web page went up more than a year ago, the company has dedicated a significant amount of resources to keeping its information and web site fresh. In addition, King said Countrywide had been searching for a way to reward Internet home buyers and owners who are willing to fill out the forms themselves.

Although Countrywide now has several loan officers whose sole job is to field interest from the Internet and turn it into real loans, Internet loan seekers tend to be people who are capable of doing more for themselves, King said. From the company’s point of view, the Internet is a much cheaper way to attract customers. By passing along this significant savings, Countrywide hopes to attract a large segment of the Internet loan business.

King admits that the company has poured hundreds of thousands of dollars into getting the web site up and running. In addition to providing up-to-the-minute real estate news and information, Countrywide’s page has a “home loan Wizard” which allows consumers to enter loan information such as their income and debt payments, the location of the property, and the amount of cash savings available to complete the transaction. The Wizard then calculates all closing costs, computes the maximum home price the consumer can afford, shows a range of interest rate and point combinations on more than a dozen of Countrywide’s most popular loan programs.

The thousands of visitors each month to the Countrywide home page, however, translates into just a couple of dozen buyers going through the Internet pipeline at any one time. In addition, though the Gold Credit loan has been available since October, neither King nor any other Countrywide spokesperson had detailed figures on how many Gold Credit loans had been closed, the average size of a Gold Credit loan, or whether the borrowers earned one income or two. These are facts and figures that would be of interest to Internet observers who generally believe Internet users are wealthier and more highly educated than average Americans.

King says none of this doesn’t bother him. He believes that the future of electronic commerce is the Internet and those that can provide the cheapest product with the best service will win the lion’s share of the business. Over time, he believes tenacious Internet surfers will find Countrywide’s home page (, recognize the savings attached to applying for a loan from home, and begin their applications.

Oct. 17, 2003.