Over the past decade, loanDepot has quietly grown to become one of the largest mortgage lenders in the U.S. underwriting $42 billion in home loans in 2019 — the Consumer Financial Protection Bureau has yet to release 2020 numbers. If you need to buy, refinance, or remodel a home, LoanDepot offers a wide variety of loan products. Although it excels as an online lender, loanDepot also has approximately 200 physical locations across the United States. He calls these branches lending stores.
This article will dig into the details of this unique lender.
Contents:
- About LoanDeposit
- Mortgage options
- Mortgage Qualifications
- Rates and fees
- Client satisfaction
- Advantages and disadvantages
About LoanDeposit
loanDepositThe founder of , Anthony Hsieh, is a pioneer in online lending. He started HomeLoanCenter.com, the first online lender available in all 50 states, in 2002. This company eventually merged with LendingTree. Before that, in 1989, he started LoansDirect.com, which E*TRADE eventually acquired. Hsieh started loanDepot (NMLS ID # 174457) in 2010 and – despite recent discussions of an initial public offering (IPO) – he continues to own and operate this Foothill Ranch, California-based lender.
Originally, loanDepot used traditional underwriting for most of its loan options, but has developed an automated application process that uses technology to streamline the mortgage approval process. loanDepot calls this process Mello Smartloan.
What does all of this mean for you, the home buyer? This means you can get your mortgage approved faster and with less hassle, especially if you apply online.
Mortgage options
loanDepot offers conventional loans and subsidized loans through the Federal Housing Administration (FHA) and the Department of Veterans Affairs (VA).
Fixed rate mortgages
loanDepot offers 10, 15, 20 and 30 year terms on conventional fixed rate loans. Most conventional loans require a down payment of at least 3%, but a low credit score could limit your options. You can lock in your rate so that it stays the same for the duration of the loan.
Adjustable Rate Mortgages
loanDepot adjustable rate loans come with a locked rate for 3, 5, 7 or 10 years. After this period, the rate will fluctuate each year depending on the market.
Giant Loans
These loans exceed Freddie Mac’s and Fannie Mae’s limits for conventional loans. In most markets, borrowing more than $548,250 requires a jumbo loan — conventional loans that have higher limits in some of the more expensive markets.
FHA Loans
Federal government support helps LoanDepot extend credit to home buyers with lower credit scores, but there’s no income limit, so anyone can use this loan program. The FHA requires a down payment of at least 3.5%, and mortgage insurance premiums last for the life of the loan, unless you put down a 10% down payment.
FHA 203k Loans
This special FHA loan program works well when you buy a repairman. It includes money to buy the house and extra money to renovate it. The eventual value of your home once the renovations are complete determines the underwriting decision. You will need additional documentation to show that you are working with a qualified contractor with an appropriate calculated budget for your renovation project. Not all lenders offer this home improvement loan program.
AV loans
Veterans, active duty military personnel, and some surviving spouses of veterans can purchase a home without a down payment through the VA loan program. VA loans do not require ongoing mortgage insurance, and they can offer attractive rates to borrowers.
Refinancing by collection
With this loan, you can replace your existing home loan with a new loan while simultaneously taking out money for renovations, debt consolidation, or other expenses. In addition to buying a home, you can refinance your existing loan at a lower rate, shorter term, or both using an FHA, VA, or conventional loan.
What is missing from LoanDepot’s product range?
Borrowers will not find United States Department of Agriculture (USDA) loans in loanDepot’s product line. This type of loan can sometimes allow rural home buyers to take out mortgages with no down payment. However, many lenders have USDA loans, so you should have no trouble finding one.
You also won’t find home equity loans or home equity lines of credit (HELOC) at loanDepot. These second mortgages are common lending products with banks, credit unions, and other traditional lenders. They’re great for financing home renovations or using your capital to pay off higher-interest debt. loanDepot.com used to offer personal loans, such as debt consolidation loans, without collateral, but now sticks to secured mortgages.
Mortgage Qualifications
Most home loans require a minimum credit score of 620, but home financing is not an exact science. Lenders will consider various factors, including your debt-to-income ratio (DTI). With LoanDepot or any other lender, you’ll have access to the best interest rates when you apply with a higher credit score.
This blog is full of resources to help you if you need to work on your credit score before applying for a loan. You should know your credit score before you start shopping for a mortgage.
When you see generic quotes on a website like LoanDepot, those rates assume you have a credit score of 740 and a DTI of 35% or less. Unless you qualify for a VA loan that doesn’t offer a down payment option, expect to put down at least a 3% down payment on your home purchase. Applicants with more credit problems may have to pay higher down payments.
Rates and fees
As a private company, LoanDepot does not have to publish its origination fees or interest rates. Currently, it does not share this information, so you will need to check with your loan officer before finalizing your loan. Other sites refer to LoanDepot’s loan origination fee of 5%, but such a high fee would far exceed the industry average of 0.5% to 1%, and LoanDepot is unlikely to charge a fee. as high.
On VA loans, Department of Veterans Affairs rules state that origination fees cannot exceed 1% of the loan amount. Additionally, homeowners who purchase a home through loanDepot get a lifetime guarantee that they will no longer have to pay loan origination fees if they refinance the home through loanDepot. The lender also waives or reimburses your refinance loan appraisal fee.
That said, you should never pay a 5% loan origination fee, which is exorbitant by industry standards. A 1% fee on a $250,000 loan would cost $2,500. On that same loan amount, a 5% fee would equal $12,500. This amount of money should cover – or almost cover – all of your closing costs.
If you get a quote from LoanDepot, be sure to compare their loan fees with those of other mortgage lenders. The focus is on interest rates when shopping for a mortgage, but remember to discuss lender fees with your loan officer before accepting an offer.
Client satisfaction
Across its range of mortgage products, loanDepot has high customer satisfaction scores. The 2020 JD Power Customer Satisfaction Survey awarded loanDepot 844 points out of a possible 1,000 – 12 points below the industry average – for loan approvals. Only three lenders performed above the industry average: Chase, Bank of America and Quicken Loans/Rocket Mortgage.
For loan servicing, loanDepot has not performed as well, but few lenders do this due to the fact that servicing is a long-term relationship that offers more opportunity for complaints. For service, loanDepot scored 753 out of 1,000, about 28 points below the industry average of 781. These JD Power surveys are good guidelines as they reflect many customer experiences. But keep in mind that your experience may be different.
As a loan servicer, loanDepot has ways to help borrowers catch up on late payments and forbear if necessary. The key here is to be proactive: Contact customer service as soon as you have a problem making payments. Waiting too long can limit your options.
Like most loan officers, loanDepot has worked with account holders during the COVID-19 pandemic to help them stay home despite financial hardship.
LoanDepot Advantages and disadvantages of the mortgage
LoanDepot has a lot to offer, but there is no such thing as a perfect lender. Here is a summary of the pros and cons of LoanDeposit:
Advantages
- Online loan process and loan service
- Wide variety of conventional and subsidized loans
- Branches available in many states
- High customer satisfaction rate
- Support from an experienced mortgage lending team
- Lifetime guarantee that covers future refinancing costs with loanDepot
The inconvenients
- Unclear loan rates and fees: check yours carefully before finalizing your loan.
- No USDA loans available
- No second mortgages, such as HELOCs or home equity loans
- Not always ideal for low credit borrowers
- No rate quote available unless you start a loan application
- Not ideal for complex mortgage applications
Is a LoanDepot mortgage right for you?
With hundreds of home buying and refinancing lenders, you may find a good fit, especially if you have a credit score above 620 and a DTI below 43%. loanDeposit is a legit lender, and it’s especially good for online borrowers who want a home improvement loan, like the FHA 203k. Customers who need a quick turnaround for a simple loan application will also like loanDepot, but if you’re shopping for a second mortgage or USDA loan, you’ll have to look elsewhere.
© Copyright 2021 Advertising Practitioners, LLC. All rights reserved.
This article originally appeared on Money.com and may contain affiliate links for which Money receives compensation. The views expressed in this article are those of the author alone, not those of any third-party entity, and have not been reviewed, endorsed, or otherwise endorsed. Offers may be subject to change without notice. For more information, read Full Money Disclaimer.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
