It has been a rough four years for the mortgage industry. Unless, of course, you are referring to Quicken Loans. In that case, business is just fine. Booming, in fact.
Quicken Loans is, as of March 2016, the largest online retail mortgage lender in the United States and the second largest retail mortgage lender. It also happens to be the leading Veteran Affairs (VA loans) lender and the largest Federal Housing Administration (FHA) lender. Not bad for a company that was started by four friends in 1985. Quicken Loans growth is particularly noteworthy when you consider the heavyweight banks with century-long heritages it has left in the dust.
Much of Quicken Loans market share growth occurred during the worst part of the great recession (2008 and 2009) when mortgage companies were dropping like flies. Quicken Loans was largely insulated because it did not deal in subprime mortgages.
So, is bigger better? Should you consider Quicken Loans for your next home purchase or mortgage refinance? This in-depth review will highlight the strengths and weaknesses of Quicken Loans and consider the pros and cons of doing business with the Detroit-based mortgage lender.
What Does Quicken Loans Offer?
One of the big advantages of Quicken Loans is its broad selection of mortgage products. Unlike other online lenders that dabble in all kinds of loan products, Quicken Loans focuses exclusively on the mortgage sector.
Adjustable Rate Mortgages – A smart choice for buyers who plan to flip the property in a few years or who simply want to guarantee lower rates in the early years.
YOURgage – Quicken Loans differentiates itself from the crowd of mortgage lenders by giving borrowers the ability to choose whatever term they prefer from 8 to 30 years. This flexibility gives homebuyers greater control over their budget and provides the option of saving money in interest by paying off the mortgage faster.
30-Year Fixed Rate Mortgage – The classic 30-year mortgage, Quicken Loans most popular mortgage, offers low monthly payments that are fixed for the life of the loan.
15-Year Fixed Rate Mortgage – This loan combines the security of a fixed rate with the interest savings of a shorter-term mortgage. If you can afford the larger monthly payments, it can be a smarter option than the 30-year fixed rate mortgage.
FHA Loans – FHA loans are easier to qualify for, provide great flexibility and rate security, and require smaller down payments. If you are looking into an FHA loan, consider Quicken Loans. It has the lowest default rate among FHA originators. QL also offers FHA Streamline, the refinance loan for FHA mortgages.
VA Loans – The Veteran Affairs backed loans provide veterans with lower rates and the option to buy a home with no down payment. Quicken Loans is the leading originator of VA loans.
Jumbo Loans – The choice for buyers looking at properties between $417k and $3 million. Quicken Loans also offers flexible rates and terms for these big boys.
Reverse Mortgages – Quicken Loans’ affiliate One Reverse Mortgage, LLC, provides reverse mortgages to homeowners 62 years and older who want to have their cake (live in their home without mortgage payments) and eat it (cash out on their equity).
What About Quicken Loans’ Rocket Mortgage?
Rocket Mortgage is Quicken Loans’ entirely online mortgage option. Rocket Mortgage leverages a state-of-the-art online underwriting platform to help borrowers get approved for a mortgage in less time that it takes a rocket to reach low earth orbit altitude (8 ½ minutes according to this NASA launch director). Of course, the property appraisal and closing will take a little more, but it is still a revolutionary change in how long mortgages take to process.
What Are Quicken Loans’ Mortgage Rates?
Mortgage rates can change daily and vary wildly depending on the credit profile of the borrower and the type of mortgage purchased. To see the latest rates and terms visit Quicken Loans profile page on SuperMoney.com.
As of March 2016, these are Quicken Loans mortgage rates:
Note: All rates are based on a $200k property with a 75% loan-to-value rate.
5-Year ARM: 3.61% APR – Remember ARMs revert to the market index once the introductory period ends. This APR includes 2.00 points that much be paid at closing and is based on a 30-year term.
Captain Money Jargon Buster: A point is a fee mortgage lenders charge. There are two types of points: origination fees and discount points. Lenders charge origination fees to cover their overhead and other costs related to processing a loan. Discount points are prepaid interest on a mortgage that borrowers can pay to lower their rates and save money throughout the term of the loan. Discount points are tax deductible.
15-Year Fixed: 3.345% APR — The APR includes 2.25 points due at closing.
30-Year Fixed: 4.022% APR – The APR also includes 2.25 points due at closing.
VA 30-Year Fixed: 3.526% — This APR includes 2.125 points due at closing.
VA 5/1 ARM: 2.933% APR — This is Quicken Loans’ lowest rate. It includes 2.125 points due at closing and rates become variable after the first five years.
Captain Money Tip: A healthy dose of skepticism is recommended when looking at mortgage rates. As you would expect, lenders advertise the best rates available. You may not qualify for these rates. The rates above assume borrowers have a credit score of at least 740 and a loan-to-value rate of 75%. Properties with a higher loan-to-value rate may require a private mortgage insurance, which will be added to the monthly payment.
What Are Quicken Loans’ Ratings?
Since Dan Gilbert, the company founder, bought Quicken Loans back from Intuit in 2002, Quicken Loans has remained a privately held company. Therefore, it is not required to disclose its financial information. However, rating companies, such as Moody’s and Standard & Poor’s rate Quicken Loans’ financial stability highly. As of March 2016, Quicken Loans receives a Ba2 (outlook stable) from Moody’s and a BB (outlook stable) from Standard & Poor’s. BBB gives QL its highest rating: A+.
Customer satisfaction ratings are Quicken Loans strong point. QL has topped J.D. Power’s Customer Satisfaction Ranking six straight years: 2010 to 2015. In 2010, J.D. Power named Quicken Loans Customer Service Champion. Online customer reviews are mixed. Although it rates high in leading comparison websites (such as — ahem — SuperMoney) some customers do complain about delays in the loan process and a lack of transparency on fees and charges. However, other clients praise QL for its speed, attentive customer service, and clear pricing schedule.
How Do Quicken Loans Work?
Quicken Loans has a five-step mortgage process. Here is a brief summary, so you know what to expect.
Step 1 – Apply online. QL assigns you a personal banker that will use the information provided on your application form (and additional questions) to help you determine which loan option is best for you. Find more details on the application form below.
Step 2 – The Infamous Credit Pull. Quicken Loans performs a hard pull on your credit to determine what rates you qualify for. This only takes a few seconds and means you get firm rate offers not just fuzzy guestimates. A hard credit pull will ding your credit score a little, but its effect is often exaggerated. Expect your credit to drop by a few (around 5) points.
Captain Money Tip: If you are shopping around for the best mortgage rates (as you should), make sure all the hard credit pulls are done within a 14-day period. Credit score algorithms consider up to seven credit inquiries performed within a 14-day period as a single credit pull.
Step 3 – Review Your Options. Once your credit history is out in the open, QL will offer you the rates and terms available to you. Your banker will help you decide whether a fixed, variable, 15-year, 30-year, FHA, or VA loan is the best deal for your particular circumstances. At this stage, borrowers will need to make a good-faith deposit to show their commitment to obtaining a mortgage.
Step 4 – Open A My Quicken Loans Account. My Quicken Loans is a platform QL has created so borrowers can access their loan information online or through QL’s smartphone app. It also allows borrowers to sign their documents online, which streamlines the process and allows mortgages to close in as little as two to four weeks. QL will require you to provide financial information, such as pay stubs, tax forms, and bank statements, which you can upload directly to your My Quicken Loan account. No faxes or paper copies needed.
Step 5 – Underwriting. The underwriting process is a second look at your documents and financial information by a second loan expert to verify the information submitted and ensure it meets QL’s credit criteria. While QL checks your information, it will also schedule an appraisal on your behalf from a state certified appraisal company. Notice it is the third-party appraisal company, not Quicken Loans, the seller or the buyer, who determines the value of the property.
Step 6 – Closing. Once your team of QL loan experts have ensured your mortgage application is complete, and there are no pending details, Quicken Loans will allow you to a time to close the deal. If you are processing a refinance mortgage, you can even choose where to close the mortgage.
What Is Quicken Loans’ Application Process Like?
Quicken Loans initial application form is short and easy to complete. If you meet the basic eligibility criteria, a loan officer will contact you and help you open a My Quicken Loan account where you can upload the necessary documentation (bank statements, tax forms, and pay stubs). Here is a detailed review of each step of the application form.
1. Choose What Type Of Mortgage You Want
Quicken Loans offers refinance and purchase loans
2. Provide Mortgage Details
Provide the purpose of your loan, what stage you are in the buying process (signed a purchase agreement, buying in a few months, researching options), and where (state and county) you plan to purchase the property.
3. Borrower Eligibility
Determine how much cash you have for a down payment, the purchase price of the property, your credit score, and whether you qualify for VA loans.
4. Submit Personal Details
This is the last page of the initial application form. It asks for your full name, zip code, email address, phone number, and language of preference. If you meet Quicken Loans eligibility criteria, a loan officer will contact you and walk you through the rest of the mortgage process.
What Are The Pros and Cons Of Quicken Loans?
Here is what we love about Quicken Loans:
Competitive Rates. Quicken Loans offers rates as low as 2.75% APR (as of March 2016).
Fast Application Process. QL can process mortgages in as little as 2 to 4 weeks.
Financial Stability. QL is rated is highly rated by Moody’s, the BBB, and Standard & Poor’s. It has topped J.D. Power’s Customer Satisfaction Ratings for 6 years in a row.
Wide Selection of Mortgage Products. Not only does Quicken Loans offer a wide range of home loans, it is also a leading originator of VA and FHA loans
Largest online retail mortgage lender and second largest retail mortgage lender.
Lowest default rate among FHA originators.
On the other hand:
QL performs a hard pull on your credit before offering rates. Some online lenders will offer rates with a soft pull. Just remember all lenders will perform a hard pull before approving a mortgage. In any case, credit score algorithms take into account the need to shop around for the best rates and consider credit pulls within the same period as a single inquiry.
Quicken Loans does not have brick-and-mortar branches throughout the country. So if dealing with a local branch and being able to look into the eyes and shake the hand of the loan officer dealing with your application is important to you, you may want to consider another lender. Just realize that the handshake, the eye contact, and the free coffee at your local branch come at a price: higher rates and bigger fees.