No Value added by E-Loan - don't waste your time
Written: Jun 26 '05
The Bottom Line
E-loan is a waste of money. Compared to wholesale rates you are still paying them a point and you get no service for this money.
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The concept of E-loan is appealing. You've got good credit, you know what you want and you want it quickly. Why should I pay some loan officer a bunch of bucks to do a monkey's job?
Unfortunately the implementation falls apart. You still appear to pay additional money over wholesale and near as I can tell they did actually hire monkeys to be loan officers.
My first piece of advice in general, before using E-loan or any other service for a home mortgage is to spend some time and even a little money educating yourself - your mortgage is often the most expensive thing you'll buy in your life (even more expensive than your house when you think about it). A good place to start is http://www.mtgprofessor.com/ (I won't give this site high marks for organization, but the content is top notch). Also invest the $15 in the book "How to Save Thousands of Dollars on Your Home Mortgage" - which despite its cheesy title (seems to be a requirement of any book about home purchasing) is packed with useful information and well organized.
With those references under your belt the E-loan business model will snap into sharper focus. They are really no different than a lot of bricks and mortar mortgage brokering companies although it seems they cast a wider net as far as available mortgage products. But when you compare their rates/points to the wholesale market you can see that sure enough they are adding about a point to a point and a half to make a profit. Well, duh, they have to make a profit, right?
Here's the crux of the problem. You pay E-loan money to handle the mortgage process, its there in the points (remember loan companies frequently kick back money to brokers to hide fees). Don't think so? Well, get a wholesale sheet and compare it to E-loans prices and you'll see 0.5 to 1.5 point mark up depending on the loan. So you are paying them money (quite a bit) for service. Maybe that mark up is less than other places, but it is still a chunk of change. And what do you get for it? Squat.
For your couple thousand dollars or more you get someone barely capable of operating their phone and computer much less shepherding your loan through the process. The business model is to only really service the loans that go through easily and steer customers to the products that are easy to process rather than the best fit or deal for them.
My monkey managed to run my wife's credit check *three* times - and those were hard hits mind you - ones that lower the score. He had absolutely no knowledge of the mortgage products he was selling. He seemed to want to corner us into just a few of the easiest mortgages for him to clear. It was a waste of my time.
One BIG word of warning - this did not happen to me and hopefully doesn't happen any more - but in the past at least if you let E-Loan check with third parties for loans (there is some check box along the way in the application process) they essentially send your information to the wind and literally *hundreds* of mortgage companies may hard hit your credit report in a month. Can knock over a hundred points of your credit score.
I believe if you pay someone money you should get some service in return. E-loan tries to sell itself as a place with minimal customer service and low cost. The truth is the cost isn't really low and something as expensive as a mortgage needs more baby sitting than lower primates can provide.
So what did I do? I ended up getting what is termed an Upfront Mortgage Broker. Independent broker who you negotiate a fee for upfront and you get the wholesale rate and any kickbacks. Since you are paying them directly they tend to do a great job of getting your loan through, and since the fee is fixed they have no incentive to steer you toward anything other what is best for you. I saved a couple thousand dollars over E-loan using one.
Bottom line, don't pay E-loan for zero service.
Recommended:
No
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Epinions.com ID:
kwalsh74
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Reviews written: 2
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