Several years ago I applied for a $75,000 HELOC, a Home Loan Line Of Credit, with Lending Tree. They promised 4 quotes from 4 different institutions and they delivered about 15 quotes from the four lenders so I got what they advertised. I had done some shopping around before I applied and the offers they got me were better than the ones I found on my own.
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A day or so later I accepted the best one and a Loan Officer took some additional information over the phone, basically repeating some of the key points on my online application. On this type of loan they required copies of the last two years tax returns, which I provided. A few days later they called my employer to verify my employment. Since I own a small business, I was the one who took the call.
They sent an appraiser over to establish a fair market value for my house and then set a closing date. The entire process, from application to closing took three weeks.
On the twenty-first day, they sent a Notary over to my house and we spent about 20 minutes reviewing the paperwork and notarizing my signature on the closing documents. A few days later the money was wire transferred into my bank account.
A few years later I applied to Lending Tree for a $200,000 HELOC. The process was identical to my first loan. I received numerous quotes from four different lenders within minutes. Twenty-one days from application to closing. The same Notary came to my house and a week or so later the funds became available to me. Lending Tree delivered everything they promised.
Earlier this year, rates for 30-year loans were dropping, so I called the bank that holds my existing mortgage and got some new rates. Then I called two others and got their rates. Finally, I applied again to Lending Tree for a conventional mortgage. Same procedure, fill out the online application and, within minutes, I had a multitude of quotes from four different lenders. These rates were .25% to .625% better than what I received on my own.
The next day their Loan Officer called and he began his interview. When he was done, I had some questions for him. In particular I asked him how much were the closing costs. He said $3600. Now thats not a bad figure so I told him to proceed. $500.00 of that $3600 is paid in advance at the time of application.
A few days later my Account Manager called. This guy was no rocket scientist. He was young, pleasant and well spoken, but didnt appear to have a brain in his head. I eventually assumed he was a college student working at a summer job. Sometimes his mind couldnt process certain types of information, like what to do when there was an error on one of his forms. Instead, he reacted with long pauses when is mind shifted into neutral and the conversation came to a halt. On at least three occasions I had to speak with his supervisor, whose name helpfully appeared at the bottom of all his correspondence, to get the correct answer. I nicknamed him bonehead.
When the preliminary settlement statement came there was an extra $4500 in closing costs. Bonehead said they werent really closing costs and when I asked him to explain why costs that were to be paid at closing werent closing costs, his mind shifted again into neutral and there was another long pause.
Instead of waiting for his engine to restart, I called the Loan Officer who quickly explained that a new escrow account is set up with a duplicate reserve for taxes and insurance. Just after closing, when my existing loan is paid off, that bank refunds all the escrow they presently hold for me and that money goes in my pocket. Additionally, they had added a reserve of fifteen hundred dollars to cover unforeseen expenses. That also goes onto my pocket when the loan is funded. Fair enough.
Included in the closing costs was a loan discount of 1.375%, which is their way of saying points. Whether or not to pay points depends on the interest rate you get and how long you plan on living in your house. My rational was I am not planning to move and I think this may be the lowest interest rates we may see for some time, so, from that particular loan discount I get an additional $42 a month savings over a no point loan. If I stay in my house for three and a half years I break even. If I stay in it for all 30 years of the mortgage, I save over $15,000.
After everything was explained to my satisfaction, I called Bonehead and asked him to schedule a fast closing. The Notary came to my house and the papers got signed.
All told, the process took 60 days including 12 days that I wasted. I saved about $150 per month on my small refinance and got back about $3,000 in cash. So, despite a bit of confusion, Lending Tree delivered exactly what they promised a lower rate of interest than I could find on my own, and that was good deal for me.