Ditech, E-Loan, Lending Tree...Oh My

[ldn324]

DH and I are in the process of refinancing our home mortgage. We are working with a local agent who supposedly is looking for the best deal possible for us, but we aren't 100% sure they truly are doing that. We're not happy with their rates so far and feel like we could do better elsewhere.

I'd like to shop around a little bit and was wondering about the online companies that are advertised - Ditech, E-Loan, Lending Tree, etc. Anyone have experience doing a refinance through one of these companies? What was good - what was bad about your experience?

To make it a little more complicated, we are looking to combine 2 mortgages into 1, looking for very little to no out of pocket costs at closing (bundle them into the loan) and would like to walk away with additional home equity money. I'm wondering if an online company can handle something that specialized or are we better off dealing with someone face to face in that case?

I'm really no fan of this whole mortgage business but I guess we have to do it, huh? :( Thanks for any help and advice!

[Ian]

I work for a mortgage company (the one that owns Ditech), so I know quite a bit about the entire process and can probably help.

First off, don't get too hung up on the rate. The APR is what you really want to look at. A lot of companies will tease you in with this great looking low rate, but then they load their mortgage up with fees that are sort of "hidden" from you and that jacks up your APR.

When comparing offers from multiple lenders, always compare the APR because that's an industry standard calculation and should always be an apples to apples comparison of your actual cost to borrow the money.

Secondly, Lending Tree isn't a mortgage company. They're more like a broker. You submit all your particulars to them and then they go out and solicit offers from mortgage companies who put together a deal for your business. You could go through Lending Tree and end up borrower from Ditech or E-Loan.

In general, your best bet is to go with one of the majors like a Wells Fargo. Alternative to that, your local bank will frequently be able to offer competitive rates. Banks usually get a more favorable rate on money they borrower when compared to mortgage bankers, so they can generally lend it out a little cheaper.

Again, don't lose track of the actual cost of your loan. Pay close attention to the fees and points you're being charged. Points are essentially a one time charge you can opt to pay upfront which basically "buys down" your interest rate.

For example, a 30 year fixed conforming mortgage with 0 points might net you an interest rate of 6.75% (assuming your a prime borrower) in today's market. Pay one point (which is equal to one percent of the amount you're borrower, so say $1,000 per $100,000 borrowed) and you might buy that rate down to 6.50% or so.

Why this is important is because sometimes it isn't obvious when lenders are going to charge points at first. You might see that 6.50% rate and jump at it, later realizing you're locked into paying more cash at closing (or rolling it into your mortgage since you're doing a refi) than you would have for another loan with no points. Points aren't inherently bad (in fact they can be good if you can afford to pay them) and they are generally tax deductible. You just need to be aware they exist so you can do fair comparisons.

I probably shouldn't say this since I effectively work for Ditech, but online lenders like them tend to provide quick, fast service but their mortgages can be sort of fee laden. I tend to advice people to steer clear of them unless they're really willing to pay a little more for fast, easy service.

If you have anything else you want to know, feel free to PM me. I know we also have a few loan officers on the boards (I know Seth, GoofyFanatic, is one), so they may be able to help you as well.

[Jeff G]

WDWacky offers some great advise. Just to offer my :twocents:.


I 'm a mortgage consultant for a Small mortgage broker/banker and tend to beat most of the banks & credit unions in my market with both my rates and APR's. I would defiantly shop around but I'd advise to look locally. From the experience I've had with my customers who have dealt with the internet companies they end up with good rates but very high Annual Percentage Rates(APR's) because the rates are bought down with a lot of points and misc closing costs. If your not familiar with APR's it's a calculation of the interest rate your paying with the closing costs recalculated into the equation. In short a tool to help you shop.


It sounds like the loan your looking for has many variables which could limit the companies you have to choose from.From what I can see your combining a 1st & 2nd plus looking to take cash out. If the loan amount is under 80% of your home value that will leave the door open to most banks and mortgage companies. If you borrowing 80-90% of the equity level in your house most banks can do that loan but you'll be looking at paying private mortgage insurance or paying a higher rate. If your looking at borrowing greater than 90% with cash out the conforming products wont be available so most banks are out as an option and slightly higher rates are realistic.

Another factor that comes into play is whether your current 2nd mortgage was a purchase money 2nd or if you have taken that out since the purchase. Any 2nd mortgage opened after the purchase date makes a conforming product with the better rates a cash out refinance. Cash out can drive up rates and will limit some of the programs.

With all these variables that come into play a good mortgage consultant can walk you through the many options and offer advise. Mortgage Consultants/Brokers generally will represent many different companies and are not limited to the one or two products that banks have, in your case this may work to your advantage (almost all of my business is bank referred loans). I offer all of my services with no up front costs or out of pocket costs if the customer prefers, I'd advise as you shop that you look for someone who has no application fees.

I'm not sure if you have your credit score information, if not you can get it a free copy of all three credit reports at www.annualcreditreport.com. This is a free, no gimmick service sponsored by the government & all three credit bureaus so consumers can run a free credit check once per year . For a few dollars extra you can get your scores from all three bureaus(Experian, Equifax and Transunion). The scores are important in approving loans. Once you have these scores you can then call around to different mortgage companies and banks and ask for rates without having to compete an application. If someone doesn't want to quote without an application move on.

As you narrow down to a company or two I would also check you local Better Business Bureau to make sure these companies have a good standing. If your comfortable with the company you choose make sure you get a Good faith Estimate and the Federal Truth In Lending Disclosure. These two forms, along with several others, are required to be disclosed to you within 3 days of completing a loan application. The GFE will show you your anticipated closing costs(and should guard against and surprise closing costs) and the TIL will show you the APR. Both are important for you to see in the shopping process.

I know this sounds like a lot of work but being educated and shopping can save you hundreds to thousands of dollars in initial closing costs and possibly a lot more in interest savings over the years. A savings of even $50/month on a normal 30 year mortgage is a lifetime savings of $18,000.


I cannot do loans outside of Wisconsin but if you would like to ask more specific questions or would like my input on any offers you get I'm more than willing to give my professional advise.

Best of luck!


One more thing I thought of after I posted this, if you are looking at a higher equity loan (greater than 80% of your homes value) an option is to refinance your 1st and 2nd with no cash out to stay at a lower equity level which will result in better rates and once the 1st mortgage is closed look to get the cash out as a 2nd mortgage. You'll have two payments but if you can bring the rate down on the 1st by doing this it will be well worth it.

[rnin02]

My husband is a loan officer for a broker, and while the other posters offered super advice (in fact so good there were too many details for me to read at 4am!), I would just suggest finding someone you have a good rapport with, and feel like you can build a good working relationship with to do your loan. I'm not sure you could find someone like that online and you might always be doubtful of the loan you wind up with. I think my DH's customers like being always able to contact him (his work phone forwards to his cell) and the fact he is willing to meet face to face with them on their terms (their office, home, whatever)...I would personally find someone that can provide that sort of "human touch" to your loan in your situation. Of course, we are in VA so I don't know anyone in your area to recommend to you:( Good luck!

[ldn324]

Thank you for such wonderful and thorough information! :thumbsup:

I did make contact with Wells Fargo today and will be going to my credit union over lunch to get another quote.

After talking with Wells Fargo, some of things the broker has been doing seem even more shady. For instance, the guy at Wells Fargo told me that the broker should have never instructed me to obtain my own appraisal, that it should have been lender requested. Now I guess if we don't go with the initial broker, we are out the $300 we just paid! In the long term scale of things though, 30 years of cost savings far offsets that $300.

Now knowing a little bit more about the process (when I bought two years ago, I was a first time buyer - therefore rather uneducated in the mortgage process), I'm questioning what the pros are to using a broker rather than a direct lender?? If you end up at a similar overall picture - monthly rate, interest, APR, points, etc. - why pay more to a broker to get you there when you could pay little or nothing to the direct lender? This might make me unpopular with the brokers out there :blush:, but I'm just wondering if there is a benefit to using a broker that I'm not understanding :confused:

[Ian]

I'm just wondering if there is a benefit to using a broker that I'm not understanding :confused:If you were to get the same deal with a direct lender as you would with a broker, then I guess there's no real benefit (although have a real person to talk to face-to-face is a big plus, IMO).

The real issue is that you won't get a better deal with the direct lenders. They charge big fees and things so you really end up paying for the convenience, just in a different way than you'd pay a broker.

Honestly, it would help to know what your numbers are to give you more sound advice. Not necessarily the exact numbers, but numbers in the same ratios.

For example, what Jeff G was talking about was what's called your loan-to-value ratio (or combined loan-to-value ratio, if you have more than one mortgage). This is a very important underwriting criteria in the mortgage business. Generally, lenders like to see your total LTV under 80% for you to get the best deals.

This means that the total debt you owe on your home is less than 80% of the lesser of the sales price (in the event you're buying a new home) or the appraised value of your property. So to use simple numbers, your house is worth 100 grand, you owe 80 grand, your LTV is 80%.

Now it gets more complicated when you have a second mortgage, too. Continuing with the above scenario, assume you also had a second mortgage outstanding for $10,000. Then they would look at your CLTV which would be 90% ($80,000 1st + $10,000 2nd / $100,000).

There's also a third calc they can consider called HCLTV (high combined loan-to-value). This is in the event you have home equity line of credit (HELOC) against your property. In that case, you could potentially have an outstanding balance that is less than your maximum credit limit on the line. Again continuing with the above example, assume that $10,000 second is drawn against a $20,000 HELOC. In that case, your HCLTV would be 100% ($80,000 1st + $10,000 2nd + $10,000 remaining available credit / $100,000).

The reason I give you all this information is so you can sort of figure out for yourself what your ratios will be, which will give you a rough idea of how desirable you are to a lender. Add in your credit score (should be above 720 to get the best deals) and your debt to income ratio (should be 30% or under) and you'll have a great idea of where you'll fall in terms of rates.

[Jeff G]

For instance, the guy at Wells Fargo told me that the broker should have never instructed me to obtain my own appraisal, that it should have been lender requested.


No mortgage company should have you request your own appraisal, that is bizarre. Anyhow, why can't Wells Fargo us that appraisal and have it assigned over to them? This could save you the $300 you'd loose.




I'm questioning what the pros are to using a broker rather than a direct lender?? If you end up at a similar overall picture - monthly rate, interest, APR, points, etc. - why pay more to a broker to get you there when you could pay little or nothing to the direct lender? This might make me unpopular with the brokers out there :blush:, but I'm just wondering if there is a benefit to using a broker that I'm not understanding :confused:

As a broker I will defend this last comment. In the last 12 months I have closed 32 loans for Wells Fargo employees. These are people that work for the company you are looking to get your loan from and are well educated in the mortgage industry and yet are using a broker. They also get reduced UW fees if they use WF but yet they come to me because as a broker I can offer much better rates and a more diverse product selection than Wells Fargo. Today I have a 30 year fixed for example with a rate of 6.375% and a $495 processing fee and no points(the APR on this is 6.44%).

All of my business is referral based and a majority of the referrals I get are from WF employees. Many times I get family and friends from these people because they know I can take care of their loved ones better than they can internally.

As a broker we sell our loans, many of which are sold to Wells Fargo and Countrywide. When you go to them direct they have to pay for the office and the loan officer which doesn't come cheap. Because these companies have no overhead with the loans they buy from us they offer us a discounted rate which then we mark up. When we sell the loan we mark up the rate from the buy rate which allows the banks purchasing the loan to pay us our premium resulting in no cost to you from the broker. With our mark up we still tend to beat or be equal to banks and credit unions. If done right the only cost you'll see from a broker is the processing fee which even WF has(I believe there fee is up to $575).

I have programs that they don't have as well which is another benefit, we can do loans up to 95% LTV and buy out the private mortgage insurance for example. As a consultant with 15 years experience I can tell you not everyone is best served with the same loan and not being affiliated with any one company allows me to offer a lot more to my customers. This alone is an advantage of a mortgage broker.

Bottom line is you have to go where your comfortable and if thats at Wells Fargo and they are able to give you a good loan that is awesome.

[ldn324]

No mortgage company should have you request your own appraisal, that is bizarre. Anyhow, why can't Wells Fargo us that appraisal and have it assigned over to them? This could save you the $300 you'd loose.


Wells Fargo said they could not use our appraisal because it was considered ordered by us, even though we used who the broker asked us to use. Kinda sketchy there I guess since it's in my name, I paid for it, but the broker ordered it..?? :blush:

Also, I hope my last post didn't come off too harsh - I didn't mean to criticize brokers. It's just SOOO incredibly confusing trying to decide what's right in our situation. I'd almost rather pay somebody else to deal with the whole thing - headaches and all - if you know what I mean.

[ldn324]

OK, DH and I discussed and we have decided to go with a direct lender. Our Wells Fargo guy never returned my phone calls or e-mails so he's out. My credit union is taking forever to get me simple answers so they are out for now too.

I have had very informative conversations and favorable figures from Countrywide and Wachovia. I've never dealt with Countrywide before but I do have several accounts at Wachovia.

I'm leaning towards Wachovia for several reasons: a) the closing costs are lower b) I already have a relationship with them and c) they are able to use the existing appraisal so no more additional out of pocket expenses. One of my coworkers has had a horrible experience with Countrywide, so I guess in the back of my mind, that is affecting me too.

Anyone have input on either of these to companies as sources for a refinance? I don't know why, but this is making me more nervous than when we originally bought our home...:( I just want to be sure I'm doing the right thing and I won't regret it down the road. The whole over the phone/online thing also makes me nervous but where we live, we'd have to drive an hour to meet with someone in person and with my work schedule, that's not an option. Someone hold my hand and tell me it's going to be OK...:blush: