In July 2013, LendingTree launched Mortgage Negotiator, a new, free, online service that could save borrowers thousands of dollars. It's designed to allow those who've recently received a home loan offer to see how competitive it is.
How LendingTree's Mortgage Negotiator Works
All you have to do is input some details of that current offer into the easy-to-use tool, which is on the company's website. Mortgage Negotiator accesses LendingTree's large real-time database of current mortgage deals and compare yours with those being offered by other lenders. Its analysis covers four areas:
- Mortgage Interest Rate
- Lender Fees
- Monthly Payment
How You Use It
When apply for a mortgage, mortgage lenders must send you within three days a Good Faith Estimate (GFE), which lays out for you the terms of the loan and a realistic estimate of the likely costs (fees, points and so on). Many mortgage lenders are also willing to issue a GFE to consumers who are shopping and have not yet applied for a mortgage.
Now's the time to use Mortgage Negotiator. Has your lender advertised a great headline rate, but actually offered you a worse one? Or do you still have an excellent rate, but find that the costs for getting the loan are higher than you expected? This is where the new tool provides you with solid information that you can use to bargain with your lender -- or walk away and take a better offer.
What You Get from Mortgage Negotiator
All you have to do is input some of the information contained in the GFE, and in seconds you should be presented with interactive charts showing you how competitive your offer is. And you even get negotiating tips that could help you make a powerful case for revising the GFE with lower mortgage rates and/or more affordable costs.
At the same time, you are shown real-time offers from other mortgage lenders, along with customer ratings and contact details. You can use those as leverage when you're negotiating with your existing originator, or simply walk away... straight into a better deal.
How Much Might You Save?
In a statement, LendingTree's chief product officer Nikul Patel explained why the company launched the new tool:
Our research indicates that only 51 percent of consumers compare mortgages. But whoever does that can end up saving $100 or more per month on their mortgage payment. To make it easy for consumers to comparison shop for mortgages with the offer (GFE) they have in hand, we developed Mortgage Negotiator. We feel that this tool has the ability to empower consumers and give borrowers confidence while going through loan process.
Most of us would think a single $100 saving would be worthwhile. But $100 (or more, as Nikul Patel suggested) every month for the 360 months that a 30-year mortgage can last? That's $36,000! Use those savings first to zero credit card and other debt, and then to make some smart investments, and you could make the difference between a difficult and a pleasant retirement.
Mortgage Negotiator Launch Timely
On July 23, the very same day that LendingTree was unveiling its new tool, federal regulator the Consumer Financial Protection Bureau (CFPB) made an announcement that underscored Mortgage Negotiator's potential value. It filed in court a complaint against a mortgage company that allegedly gave "bonuses to loan officers who steered consumers into mortgages with higher interest rates."
According to a CFPB press release, the Utah-based business, which operated in 22 states, paid generous bonuses averaging between $6,100 and $8,700 per person per quarter to loan officers who persuaded borrowers to take on mortgages that were unnecessarily expensive. Those officers who failed to lure customers into high-rate deals received nothing. If the federal court finds the regulator's allegations true, the company would have been in violation of the Loan Originator Compensation Rule, according to National Mortgage Professional magazine.
The CFPB believes that tens of thousands of the company's customers may be been "upsold" in this way over the last two years or so. If only Mortgage Negotiator had been invented earlier, some of them might have escaped being victims.
Comparison Shopping for Mortgages
Anecdotally, the mortgage industry seems more buttoned-up than it was before the credit crunch, and it may be that many of the worst players have gone bust or been taken over by more responsible companies. But it's still important that you, as a consumer, keep your eyes wide open when you're finding and negotiating a home loan.
In particular, be aware that pretty much everyone you're likely to talk to when contacting mortgage lenders is primarily a salesperson. That's regardless of the individual's job title, and of whether you're dealing with a famous-name lender or a mom-and-pop broker. Even if these people are incentivized in accordance with the law, their job is still to sell loans and make money for their employer.
That's why it's shocking that very nearly half of those seeking a mortgage fail to comparison shop during the process. Without the market knowledge this provides, consumers are almost asking to be victims of overzealous loan officers. Now, at last, Mortgage Negotiator provides everyone with a new line of defense.