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Getting Quotes: Mortgage lender Web sites useful
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Published: August 17, 2008
LOS ANGELES - Mortgage lenders have raised the bar on what it takes to qualify for a home loan the past couple of years, but shopping for a loan online has actually gotten a bit easier, if not necessarily less confusing.
Where mortgage-scouting Web sites traditionally required users to enter a swath of personal information to generate rate estimates, the newest sites offer users a way to comparison shop for a loan under the cozy blanket of anonymity.
This can help allay concerns about turning over too much personal information online or of being hounded for weeks by mortgage lenders soliciting your business.
Question is, do these rates hold up once real names, credit scores and other personal details come into the picture?
"My gut instinct is that there will be a wide disparity about what rates are quoted on these sites and what they actually end up with, and not necessarily due to the borrower," said Robert Statnick, the chairman of the California Mortgage Bankers Association. "All the sites may not collect all the data that's necessary to give an actual price quote."
In fact, the lenders ultimately do collect the data they need to figure out what to charge for a loan, but these sites have made it possible to delay that step to give the prospective borrower enough time to shop incognito.
Zillow.com and MortgageMarvel.com have embraced this consumer-friendly concept in the past year, although that's where their similarities end.
Mortgage Marvel bills itself as the mortgage-shopping version of travel sites Orbitz.com or Expedia.com.
The site, which was officially launched in the spring of this year, is operated by Mortgagebot LLC, a company from Milwaukee, Wis., and a provider of online loan-origination technology for banks and other lenders.
As do the online travel sites, Mortgage Marvel lets users enter details on the kind of mortgage they need and the site rounds up real-time rate and lender-fee quotes directly from hundreds of lenders.
The site boasts that users don't need to put in personal details to get real rates, not teaser rates used to bait visitors. But the catch is users must have a credit score of 720 or better.
Mortgage Marvel says it can make this claim because it's tapped directly into the 250 banks and credit unions' own automated loan-pricing databases. (It gets a fee every time a user fills out an application with a lender on the site.)
The site requires users to enter only three pieces of information: the loan amount, the property's value and its ZIP code. Users can toss in a few more variables, including specifying whether they want to buy a condo or a detached home, whether they would prefer a 30-year, fixed-interest rate loan or an adjustable rate mortgage.
The site then displays a list of any lenders offering quotes on the loan.
But there's where your anonymity ends. To find out whether you qualify for the rate, you must now fill out an application full of personal information with the lender.
"It's easy, reliable, accurate and fast -- there's no bait-and-switch," said Dan Welbaum, the chief marketing officer for Mortgagebot.
Zillow's Mortgage Marketplace page also doesn't ask for identifying information. It only requires an e-mail address.
Instead, Zillow relies on the honor system, counting on users to fill in accurate information about their personal financial profile, such as their credit score -- unlike sites that actually ask you for your Social Security Number so they can run the credit check themselves -- and their annual income, how much money they've saved, and so on.
Of course, Zillow users are also asked to enter how much money they want to finance, and preferences on their loan type.
The site broadcasts this information to its roster of participating mortgage brokers and lenders -- 3,332 as of Friday -- who then e-mail you with loan rate quotes.
Once you select the broker whose offer you like the best, you will have to submit a formal application with personal information.
Zillow says that loan queries will garner six rate quotes, on average, with 97 percent of all queries receiving at least one rate quote.
With several brokers competing for a sale, it's not hard to imagine that some might have incentive to low-ball their quotes in hopes of luring in business.
Zillow, which makes its money by selling ads on the site, encourages participating mortgage brokers to stick to the quote.
Spencer Rascoff, the chief financial officer for Zillow, says the company girds against this by encouraging consumers to give brokers ratings, much like the reputation rankings sellers rack up on auction giant eBay.com.
"All those (dubious) loan requests, they can be flagged by the community," Rascoff said.
Zillow's online forums buzz with posts from users discussing favorable and negative experiences with brokers. The site also highlights which brokers have amassed the highest positive ratings.
Since launching its mortgage-search product in April, Zillow has reviewed hundreds of red flags and barred more than 10 lenders for employing bait-and-switch tactics with their loan rates, Rascoff said.
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