It's a very good question given that lenders on the Internet take two primary forms. When online lending first got attention, it was from dedicated companies known as aggregators. These Internet companies use a particular algorithm to search the marketplace for lenders that meet a particular borrower's search criteria. These are companies like E-Loan.com and Lend-ingTree.com — they are not lenders. Instead, they have a very similar role to mortgage brokers. Aggregators don't make the specific loan, but they match borrowers and lenders. They attract borrowers with the promise that they will save money through streamlined technology in the place of loan officers that are common at most brick-and-mortar lenders.

Direct lenders are companies already in the lending business — traditional banks, savings and loans, credit unions, and independent mortgage bankers — that have simply developed an online presence. Many U.S. banks have developed their own proprietary online gateways that allow potential borrowers to go online and investigate rates, ask about specific loan products and, in most cases, start the application process online. They might have been a little late to the party, but they are growing in importance as consumers like the idea of dealing directly with a name-brand institution.

There is a third group, and you should either avoid it or commit a significant amount of time to investigating the players thoroughly. There are dozens of generic lenders out there with names that are unknown or are similar to other established lenders trying to get you to submit your personal information online — including your Social Security number. Are these qualified lenders or just one more scam on the Internet? You absolutely must check before you communicate with them.

According to Forrester Research and the research firm Compete, aggregators tend to beat traditional lenders handily when it comes to attracting prospects. Their figures from 2006 show that aggregators receive 72 percent of all prospect visits, with at least six million monthly visitors. In contrast, traditional lenders receive 19 percent of visits, and online lenders account for the remaining 9 percent of prospects.

According to Forrester, respondents say that the most important element when choosing any lender is information on rates and fees. More than 75 percent of respondents went online for rate information — at least twice as many as for any other piece of information. It adds that many applicants will go offline to apply, either by phone or in person, but 37 percent of applicants apply online or submit a lead form via the Internet.