The market is saturated with mortgage lenders so consumers may choose from several plans. They can apply for a loan at a traditional financial institution, like a bank or credit union, at a non-traditional financial institution, like Quicken Loans, or online, at a marketplace like LendingTree, where they can compare various loan offers side by side.
LendingTree might be an excellent option if you are in a hurry to get a mortgage loan. Since it does not provide actual mortgages, the organization serves as a lead generator for a wide selection of lenders. Customers with good credit who make a loan request are usually contacted by several of the network's partner lenders within minutes.
What is a Lending Tree?
Contrary to popular belief, LendingTree is neither a mortgage lender nor a broker. The firm acts as a broker, connecting borrowers with a network of lending institutions. LendingTree is a lead-generating service that essentially allows lenders to bid on homebuyers and refinancers who suit their criteria.
The company has been around since 1996 and calls itself an "internet lending marketplace." Users can establish connections with numerous loan providers on the site to shop for the best rates on loans, credit cards, savings accounts, and insurance. Home loan applications are distributed across its extensive network of financial institutions.
How The LendingTree System Works
Submitting a loan request on the company's website or phoning the 800 number is the first step in getting a mortgage via LendingTree. Your income, assets, and obligations, as well as the amount and kind of loan you want, are all taken into account.
LendingTree also needs a Social Security number to perform a soft credit draw and determine your credit score. Your submission of information to LendingTree is not considered a credit application.
How Does LendingTree Make Money?
Potential borrowers can benefit from utilizing LendingTree because the service is free. A broker fee is often a percentage of the loan amount the borrower or the lender pays. LendingTree prevents such from happening.
Instead, the firm receives compensation from the banks and specialist mortgage lenders that make up its network. Because of the high quality of the leads they receive from LendingTree; the company is ready to foot the bill for collecting the loan applications.
Comparing Prices
Any time you are presented with loan offers from more than one lender, you need to be sure you are comparing apples to apples to make an informed decision. Consider the loan amount, period, and any fees in addition to the interest rate. Some banks and mortgage companies may charge you for prepayment interest.
For instance, if one lender offers a cheaper rate than the rest, you should find out whether they are making up for it by charging you point the others aren't or forcing you into a loan with a shorter term.
You may get a better idea of the actual cost difference between loan estimates with dramatically varying interest rates, fees, and points by comparing the Annual Percentage Rate on each Mortgage.
Pros of Using LendingTree
Anyone looking for a mortgage, refinancing, or home equity loan would be wise to shop for the best rate. Due to the simplified nature of LendingTree's loan request procedure, comparison shopping is quick and relatively straightforward.
In approximately the time it takes to fry an egg, users will find out if they are eligible for a loan and on what circumstances. You might try to negotiate with lenders in the hopes that they would reduce the interest rate or the closing charges because you are likely to receive many offers in quick succession.
The Drawbacks of LendingTree
LendingTree has a lot going for it, and savvy borrowers may use it to their advantage to get a better mortgage deal than they would have obtained if they had only worked with one lender. Although LendingTree has many benefits, it also has some downsides.
Consumers who have used LendingTree have complained that they receive many phone calls and emails. Each prospective borrower lead is a significant revenue opportunity for those loan officers.
The Conclusion
Mortgage quotes from several lenders may be obtained quickly and for no cost with LendingTree. While LendingTree claims to prevent lenders from contacting you by phone or email without your permission, the website warns users not to expect a smooth process. In the end, clients who want a speedy response and don't require the counseling a broker may give are the best candidates for the online loan marketplace.
