If you’re shopping for a new mortgage, there is now another option out there. The Zillow Mortgage Marketplace attempts to make connecting borrowers and lenders as effortless as typing a search on Google. Will it work?
Application: Less Nosy, But More Responsibility
While shopping for loans, I had two big worries. One, I didn’t want to give out my Social Security number to everyone. Two, I didn’t want 100 desperate brokers calling me all day long “fighting” for my business. No problem with Zillow, you only need to fill out a application with your property details, your credit score, your income, and your assets. This is all the information that a loan officer needs to provide you a quote.
To see your loan offers, all you need to do is sign up with an e-mail address. No SSN, no name, no address, no telephone.
But you really want to avoid painting a rosier picture than reality, which is what most people tend to do. If your info is wrong, then the lender’s quote is null and void, and everyone’s time was wasted. Check your credit score beforehand, ideally at all three credit bureaus. It’s one thing to say you make $X per year, it is another thing to prove it. For a full-documentation loan, you need to have two years of W-2 forms, your last tax return, and your most recent bank statements. They will want everything! I’d even say it’s a good idea to pull these up before filling out this form.
Comparing Bids and Feedback Ratings
Participating lenders are supposedly verified to make sure they are licensed brokers without excessive complaints filed against them. Bids are also required to be specifically tailored to your loan, not just generic rate instantly created by a computer. In addition, Zillow is adding a feedback system (like eBay) where you can help determine the reputation of lenders (service, extra fees, if they bait-and-switch, etc.). The system is probably too new for this to matter right now, but hopefully it’ll help in the future.
I submitted an application today for a home equity loan, but I haven’t gotten any bids yet. However, I do like that all the loan quotes will be organized in the same format, so you can compare loan offers side-by-side easily. Sometimes it’s a puzzle to figure out all the lender’s fees in Good Faith Estimates.
Finally, lenders will be able to see what other lenders have been offering you. This gives them a chance to see their competition, and even lower their initial bids. I don’t see anything wrong with that. 🙂 Once you pick out a lender to contact, then they will see your e-mail and you can move forward with the loan.
I couldn’t find any information about how Zillow is making their profit from this. I’m assuming they will charge a fee per lead or per closed mortgage.
More info: Zillow Press Release
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Thanks for this info.
I’m very curious about your experience with this service.
Thank you for sharing this Jonathan. I submitted an application today for a refinance. We’ll see how it goes. I like that it doesn’t require a SSN or any personal info.
Interesting…I might have to give this a go. Ive been using zillow for a long time to check home prices in areas etc I guess it was just a matter of time before they branched out.
Sounds easy. It will be interesting how things end up. you’ll have to keep us all updated.
I have heard from various sources that Zillow sells leads, including their flagship product of providing home values. If someone inquires their home value, this generates a flag which they sell to mortgage companies to contact the owner of record to see if they’re in a position to refinance.
I think this Marketplace is an excellent concept for borrowers. Being on the wholesale side of mortgage banking, I think ALL Loan Officers and Broker’s are useless, selfish, middlemen that are just in the way of closing mortgage deals… again IMO.
Let’s be clear about Zillow. They are an entertainment company. Their data is not all that accurate (though admirably well structured and compiled), and their algorithm has a few absurd bugs in it (like empty lots in my particular neighborhood Zestimated at a higher value than similar lots with actual houses on them.
I don’t know that I’d trust them with much of anything. They are quite shady when they talk about their Zestimates. I wouldn’t offer up any information to them than they already have.
I just recieved a refinance quote, I am impressed. Quite a bit cheaper than some of the up front lenders you listed on your site several posts ago (aimloan, amerisave). I’ll have to see how it pans out.
Unless I am misunderstanding something this is the best mortgage estimator out there. You have the opportunity to give only the info. you want, (do I really want to borrow all I can, what about only having the house in one person’s name, what happens if I only want to include my income and not my wife’s as a safety net.) And then you get an idea about what lenders are actually willing to offer. Sure the offer is null and void because your data is not exact but that doesn’t matter, if you are just pricing the marketplace. Then when you actually do go to look for real offers you have an idea what to look for.
This will sound like a total cop-out type statement (apologies in advance) but there are so many ways for a mortgage broker to screw you. So basically these quotes you’re receiving are teaser quotes you’ll never ever see when closing time arrives.
One of the classiest is to change the rates the day of closing, as in “oh sorry but the rates changed. They’re a little higher now.” If they can’t screw you on that you’ll get taken on some other fee you didn’t know about. There are 100 ways to get exactly the amount they want out of you. Just like a car dealer.
If anyone knows of a way to 100% control the cost of a refinance, I am all ears. I fear the only people who know how to control a refi are the brokers! This would be a very helpful discussion…
I just thought I would ask if you want to sell a TD is there some place on the Internet where you can do that?
clicclic – It is true. Bait-and-switches are common.
For one, you should always lock rates via signed contract. (No verbal.) You can also get them to sign a document saying closing costs won’t vary more than $500 or $XXX from the GFE. Lots of ways to screen and protect yourself as well, but sometimes the best is simply having someone else do it first and work off a recommendation. 😉 Hopefully this Zillow “eBay feedback” thing replicates it a little bit.
Hey, it’s Drew from Zillow. I wanted to touch on a couple of issues brought up —
1) How does Zillow make money from this? We are a media company and make our money via advertising. The Zillow Mortgage Marketplace is yet another reason to get consumers and professionals interacting with Zillow. More page views mean more revenue, and the pages within the ZMM can be monetized at a higher rate since people viewing those pages are likely on the verge of making a very large financial decision.
2) James — I’m not sure where you got your information, but Zillow does not sell leads.
Be sure that you understand the difference between the Zestimate for your home and what a bank’s appraiser’s is going to value your home.
For example, my home is listed at $ 499,500 by Zillow. A recent refi attempt using my home’s city assessed rate of $500K while the bank came in with an appraised value of $440K which knocked me out of a sweet refi rate of 5.25% to 5.875% with PMI attached.
Just be cautious if you submit the quote request using Zestimate as the he bank’s offered rates will probably change upwards when the appraisal is conducted.
Read Jonathan’s early posting about tax assessment abatements for how home values vary based on who is making the estimate. A bank’s appraisal will generally reflect the current market to the bank’s advantage.
I submitted two loan requests yesterday – one with my home’s Zestimate and one with the bank’s appraisal – Rates came in with the same spread shown above. So no refi again.
Just to warn some of you (like myself) interested in getting a better rate on a refi. Zillow provided me with yet another example of rates being advertised that can’t be attained. The Zillow quotes came in about .5% under what the reps contacted me with later. All the information I provided was accurate with no exaggerating and no issues with my credit. This is what I’ve seen from Wells Fargo, Countrywide, and a couple of others.
Coupland,
Spencer from Zillow here.
Please leave feedback on lenders who give you false rates — you can rate lenders 1-5 and leave qualitative comments about them. Let me know if you have any questions — spencer AT zillow DOT COM.
i tried this last night and got two quotes this morning. the rates seemed OK, but the monthly payment value seemed pretty high in each case. i didn’t see it mentioned anywhere on the site (although i didn’t look that hard), but i assume that they are using the assessed value you entered on the form to add in your local real estate taxes. i would have expected them to not include that b/c then it makes their quote look better …