Back in the 20th century, prospective home buyers first found a real estate agent and a place they wanted to buy. Then the real estate agent—usually—steered the buyers to lenders.

But that practice is changing, as an increasing number of home buyers first look for a mortgage online before zeroing in on a house—thanks to the ease of comparing rates and qualifying for a mortgage online. Celent, a Boston-based financial services consulting group, predicts that by 2005, 35 percent of new loans will be generated online. In 2002, by contrast, only 4 percent of mortgages were financed online, according to New York's Jupiter Research. Of those, one in four was for new mortgages and the rest were re-finances.

The number of online mortgages is rising so fast that everyone involved in the purchase of a home may be affected: banks, credit unions, mortgage companies, realtors, and of course builders, especially those who provide such services. Already, real estate agents in some major U.S. markets have started to work only with buyers that are pre-approved for a mortgage, according to the Orlando Sentinel. Kurt Pfotenhauer, a senior vice president for the Mortgage Bankers Association of America, says that the Internet is creating a class of more informed borrowers.

LoanLink, operated by The Homebuilders Financial Network, is typical. It features a centralized database mortgage loan origination system and Web connections to credit agencies, insurance providers, HUD, and the Veterans Administration; links to local bank offices, where data can be input from the borrower; and automated confirmations of a loan status, sent via e-mail to all parties.

Celent found that online lenders have increased efficiency and profitability, and lower costs. But people still need human contact with a loan officer. And someone has to hand over the keys.