Online Mortgages
Web portals are as guilty of making extra profit on your loan as any loan originator on the street. If you search for a loan on the web, you will run into two different types of companies. One is a list broker. They are not in the mortgage business. It is their job to persuade you to enter your information on a website. They sell your name and information to a number of different companies who have paid sometimes up to $25 for it. Unfortunately for you, your information is sold to several companies and they will hound you for business.
The other company is a retail branch of a bank/lender or a broker. They also want you to enter your information and apply for a loan. Their big selling points are convenience, speed, non-commission sales people, and low rate. They will tell you they can provide a low rate because their overhead is low and the savings will be passed on to you. Total fantasy. The rate would be the same as any other company including the extra profit in it for them.
Two big web portals are Lending Tree and E-Loan. Lending Tree claims you will get the best loan and lowest rate because lenders compete for your loan. This could not be farther from the truth. If you read their licensing disclosures, you will find they act as a broker in many states and actually increase the cost of your loan by imposing a “Computerized Loan Origination (CLO)” or “co-broker” fee of $760 simply because you used their site to post your application. Also, they do not guarantee you the lowest rate. They say they will try to get your information to at least 4 lenders. Again, you will be inundated with loan originators who received your lead from Lending Tree. Lending Tree is a lead generator that hands out leads to other companies that have all paid over $25,000 to join their network. It is no different than picking up the phone and calling salespeople except you get charged an extra $760!
E-Loan is a broker-bank. By now you should know why we say not to use banks. Just in case you don’t here it is again. Broker-banks do not have to disclose the extra profit they make on your loan.