Lending Tree? Bad idea?
January 3, 2006 1:14 PM   Subscribe

Mortgage-Filter: Is using a mortgage offer aggregation webiste like Lending Tree a bad idea?

I want to start the process of thinking about buying a house, and going to such a site seems like a way to get a bunch of data quickly about what I can look forward to in a mortgage, but I'm wary of entering all the personal information etc. Have other people used any sites like this? Any recommendations for whether or not/how to approach it?
posted by OmieWise to Work & Money (23 answers total)
I was advised not to use such a service, as each one (apparently) pulls a credit report, which can affect your credit score. Or maybe that's just anti-aggregator propoganda.
posted by MrMoonPie at 1:20 PM on January 3, 2006

I used LendingTree to start the same process last year and was satisfied with the experience. I didn't end up going with any of the offers, but they were as good as anything else I was able to find. I'd recommend it as an educational exercise, at least. They are a reputable company and your data should remain secure.
posted by pmbuko at 1:21 PM on January 3, 2006

Multiple hits for the same type of loan application count as one hit. You can feel free to shop around for mortgages and auto loans.
posted by I Love Tacos at 1:28 PM on January 3, 2006

I used them a couple years ago to refinance. They weren't anywhere near what I found locally, and I suspect (but can't really prove) that they sold my email address.

Try a mortgage broker or two (look in the yellow pages) instead. That's where I found the best deal for my circumstances. Each broker offers many mortages from many banks.
posted by chocolatepeanutbuttercup at 1:29 PM on January 3, 2006

In my experience, with a mortgage-offer aggregation website, you get loan offers from unknown banks. If you need a loan in order for your offer on a house to be accepted (which, in my experience, you do), these offers from unknown banks are basically worthless and can (should) be rejected by the seller's realtor. Plus they hit your credit report, too many of which can result in a lower score.

I recommend that you ask people who have purchased for the name of a reputable mortgage guy. He will do the same thing as the website, but will be looking out for you rather than for these banks.
posted by goethean at 1:29 PM on January 3, 2006

If you do all your shopping around within a 14 day period (in the US), it counts as just one inquiry. Don't be afraid to check around. Don't trust lenders who dissuade you from shopping around because it will hurt your credit.

Check out MyFICO on credit inquiries. Look at the section called What to know about "rate shopping."
posted by voidcontext at 1:41 PM on January 3, 2006

That's not to sat that Lending Tree is any good. I don't know about that.
posted by voidcontext at 1:43 PM on January 3, 2006

I found the very best rate by far through using them on the house I live in now, plus 2 investment properties I purchased. However, I still shop around. You always should.
posted by visual mechanic at 1:49 PM on January 3, 2006

If you'd rather do the shopping yourself, BankRate has an excellent mortgage center.
posted by Nelson at 1:51 PM on January 3, 2006

We refinanced 2.5 years ago and used them for some research. They, or actually the dozens of lenders that they apparently sold my email address too, still have not stopped spamming me.
posted by fixedgear at 2:25 PM on January 3, 2006

I used LendingTree when I bought my house several months ago. I'd rate their service as poor. The mortgage company I found through them "lost" my application and all my information, despite having sent me a loan approval letter. LendingTree was absolutely no help when I called to complain about this. I ended up finding a mortgage on my own through a local branch of a well-known mortgage lender. I did find my realtor through LT, but LendingTree did not come through with the "cash / gift card reward" they promise at closing. (They gave me the run-around about this over the phone.)
posted by jca at 2:35 PM on January 3, 2006

I used something similar to LendingTree but each responding lender sent back an unhelpful form letter like "Yes, we'd be glad to help you with your loan. Please call me at..." Bullsh*t.

I found the best way to deal with mortgage lenders is get the best offer from any lender then call another lender and ask if they can beat it then call another... let them know what the other lender is offering. Supposedly LendingTree automates this but I don't trust it... at best it is a middleman that you can work without, at worst it is an obstacle.
posted by StarForce5 at 2:47 PM on January 3, 2006

Used them, got loan, no problem.
posted by justgary at 2:50 PM on January 3, 2006

I used e-loan for a car loan awhile back and it worked great. I had no complaints. I got a better rate than I could find locally and the service was excellent.
posted by bove at 2:55 PM on January 3, 2006

It's worth noting that I've never applied for a mortgage and I still get absolutely asstons of mortgage related and refinancing spam. I don't even own any property.

I'm not necessarily defending lendingtree and its ilk, but saying that maybe people think that's why they're getting spammed about mortgage and refi stuff, but in reality, we all are getting that garbage... even those of us who are renters and have never owned property in our lives.....
posted by twiggy at 3:23 PM on January 3, 2006

Yeah, I find the mere act of purchasing a house gets you on so many mailing lists you might as well have a PO Box for your "real" mail, and solder your home mailbox shut, nevermind the email side of things.
posted by davejay at 4:13 PM on January 3, 2006

My best friend and his wife used them, and they were fine.

Shopping lenders against each other is good...IF....you have excellent FICO scores. If you're in the low 600's or lower, for example, it can be more dicey, because some lenders are more conservative than others, some prefer that you do an FHA loan (which is a lot more paperwork) some won't loan to you altogether.

Find a guy you TRUST. Work with him. I'd ask, if possible, people in your neighborhood that you're looking at.

Prequalify on the mortgage before you start shopping for a house because that's advantageous to you as a buyer.
posted by TeamBilly at 4:16 PM on January 3, 2006

Let me just throw in a recomendation here that you try calling one or two of the biggest lenders direct, just to get a point of reference. Countrywide and Washington Mutual (google them) make millions of loans a year, to people with all kinds of credit scores.

It bugs me when people go to morgtage brokers (as some have suggested here) without first just checking in with the big banks for a quote. Where do you think the brokers get the loans? Banks! Some -- not all -- mortgage brokers make their money steering people into loans that have nothing to recomend them except a fat commission to the broker.
posted by Mid at 8:07 PM on January 3, 2006

Mid - of the last two mortgages I did, I did them with brokers to get some decent upfront terms or work with someone who could give me some real personal attention and advice. They aren't all used-car salesmen. Each note was sold to Countrywide anyway, which was what he told me would likely happen.
posted by TeamBilly at 9:25 AM on January 4, 2006

I'm refinancing our house now, and found that LendingTree wasn't very helpful unless you wanted to just start calling random banks back, because all of their emails are scripts that say "blah blah blah call us!" In my experience, it was like signing up for a mortgage broker yellow pages... and that's it really.

Definitely check with the big banks, the small banks, and the credit unions. Compare not only the rates, but closing costs, fees, application fees, etc. Ask family, friends or colleagues who they recommend. Be careful about getting a recommendation from your buyer's/seller's realtor.

Get pre-approved for sure. Gives you leverage with a seller over a potential buyer who doesn't have their finances lined up. If you have a lawyer for the home buying process, they'll be interested in reviewing that on your behalf, also.

I'm waiting for the mortgage broker I'm working with to email me over what she's drawn up... so I can take it to somewhere else to see if they'll do better for me. Compare. Pit them against each other. Look out for #1 because they are looking out for themselves. It's a process.

And don't let them talk you into interest-only anythings.
posted by jerseygirl at 10:06 AM on January 4, 2006

TB -- agreed that not all brokers are dishonest. Still, they are middlemen -- they don't make loans, they just line up borrowers with banks that make loans. Middlemen add cost -- they're not working for free. Maybe they make up that cost by finding you a truly great loan or saving you a lot of time, but not always.
posted by Mid at 6:51 PM on January 5, 2006

Most annoying thing about Lending Tree is that, almost a year after I've refinanced using a local broker that charged much less than the four identical rates quoted me by noname banks, I'm still getting random noname banks calling me up at home, the office, and my cell, asking if I'm still interested in a refinance.

If you're in a big enough area where there is media or Internet that can provide your own rate comparison, and you have a good credit score such that anyone's going to approve your mortgage, you don't need Lending Tree. I couldn't tell you if they're any good for people in other situations.
posted by commander_cool at 4:32 PM on February 13, 2006

Well, I would like to give you some clues about the lending business from an experienced loan officer, me. There are some myths that might be cleared here, and I'll try to be brief.

1. Mortgage broker vs banker-lender-loan officer. The myth is: they look for all the banks and get you the best deal. The truth is: you pay them a 1% origination fee, and then, the bank pays them depending on the program they sold you. A lender might make 0.5 to 0.7% commission on a loan. Brokers can make up to 5.75% on just 1 loan, specially if it's a Pay Option with 3 years of prepayment penalty. Lenders get paid the same, no matter what program they put you in. If it's not my good friend, I wouldn't trust my mortgage broker is giving me the best program, if I know the bank pays him depending on what's more profitable for the bank!! Another advice, ask for real credentials, don't let them tell you they have 15 years of experience... that could mean they were a car dealer for 5 years and they sold nsurance for another 9. Really. Oh, one more thing I read "don't trust buyer's realtor lender bla bla" Well, Realtors base their business on referrals and on closing the deal. A Realtor advice is better than you friend's, although in some states there is a kickback issue. The best way to choose a lender: educate yourself, go to a home buyer class, and then interview several lenders and trust your guts. Good luck

2. Interest rates: People think that shopping around will save them money, if they get a 6.00 against a 6.25% or a 6.5%. The truth is this: lenders get the money from the same place, so shopping around is just an illusion. I don't mean you don't shop around, if you don't know of a honest and aknowledgeable lender (good luck here, remember, mortgage brokers and lender are mostly sales people with no financing background, so they know how to sell). What is important in a loan? First, if it's a purchase, the most important question is: is it going to close on time? You don;t want to lose the house, your earnest money, etc. In a Refi, the question is, do I really need to Refi? 99% of the lenders/brokers will find ways to convince you that it actually is. My experience is that 90% of the people lose money refinancing. WHAT IS GOING TO SAVE YOU THOUSANDS OF DOLLARS is to chose the right program and have a long term strategy. Shopping around for rates will save you maybe $1000 a year on a 300K loan, but choosing the right program can save you $30K in 5 years,and I am not exaggerating.

3. Lending Tree. I knew them through Zillow.com. Bad choice. They are horrible, and in Mortgage Oriinator News I read that they are facing a National Lawsuit for their unfair lending practices (bait and switch) and for false advertising. I tried them myself, and I just could not believe it. They sent me a quote for a 30 year fixed at 5.6% interest rate and 7.694 APR, no discount points and only $3750 closing costs. That is just RIDICULOUS. In order to have a 7.694 APR the closing costs would need to be $70,000!!! In a country where the average 30 year fix now is at 6.3% with 1% origination fee, these guys offer you a 5.6% and with a 7.694% APR?? I called them and I had the following conversation:

"Hi, I am David and I would like to know how come it is possible to have a 5.6% on a 30 year fixed and a 7.694 APR with no points and only 3750 clsoing costs-by the way, lenders quote rates by .125% increases, or "eighths", so it should say 5.625-"
"That is just a generic rate, sir"
"What do you mean it's generic?"
"You will get that rate if you have certain financial chaacteristics"
"I understand that, but how is it possible that you offer me a 5.6% interest rate with a 7.964 APR? (APR has to be legally disclosed, by the way. The APR is required by law to be shown with any interest rate, and it onlymakes actual sense in 30 year and 15 year fixed, that was the case. I quoted a client a 30 year fixed last week at a 6.25% with a 6.54 APR, that makes sense)
"The APR is calculated by addig the closing costs, sir. So, are you purchasing a house?"
"Yes, I am, but you didn't answer my question. How is it possible that you quote me a 5.6% on a 30 year fix and next to it an AR of 7.694 with ONLY $3750 closing costs?"
"I already answered the question, sir"
"No, you didn't. If I use any interent APR estimator, I should have an APR of 5.76, with the quote you gave me"
"The 5.6% is a generic rate, sir. So, I saw that you have a credit score, are you already working with an agent?"

And we went on and on, until she just hung me, just like that.

Well, this was Nation Point, the main subsidiary of Lending Tree (I have been asking different lenders to see if they worked with Lending tree, among them my company, the US largest lender, and NONE of them ever competes, so it makes sense that they sued them for fake advertising "When banks compete, you win".

Just ask yourself this. Would you ever buy a 300K used car from a car dealer you don't know, and that you will never know, without taking the car to be inspected? So, why would you do it with your home?

There are hundreds of lenders, brokers, etc, in the city you live. And their business depends on you being happy, so I have no doubt about looking for lenders or brokers in your area -I personally prefer reputable lenders/bankers.

One last secret. The general idea is that small companies can do better than big ones when it comes to a loan. Well, as I told you, banks and mortgage companies get their money from the same sources. The loans will then be sold to the secondary market, and guess who has more power of decission of whether a loan can be sold or not. The big guys, of course. Look for the largest client of the secondary HUGE market, and you will get who is able to do the most in a legal way...

I hope this was useful, I am a responsible loan officer, and my experience with Lending tree has made me see why our profession is one of the least trusted ones... shame on us
posted by davizote75 at 2:17 PM on October 25, 2006 [4 favorites]

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