How a LendingTree Mortgage Works

Here's a way to get competing quotes from several lenders

A consumer in search of a mortgage has several options. They can visit a local bank or credit union, go to a direct mortgage lender such as Quicken Loans, or try to obtain multiple loan offers simultaneously by using a site like LendingTree.

For individuals looking to shop around for their home loan in relatively little time, the LendingTree route is one you may want to consider. The company doesn't offer mortgages itself but rather acts as a lead generator for a vast array of lenders in its network. When creditworthy customers submit their request for a loan, they are likely to obtain offers from a handful of those participating lenders within minutes.

As long as you understand how to navigate the process—which will keep lenders from calling and emailing you to secure your business—it's a quick way to see what rates you qualify for so you can potentially proceed with a formal loan application.

key takeaways

  • LendingTree is a third-party service that takes a borrower's information and submits it to multiple lenders, who then contact the borrower.
  • A borrower submits an application with info on their financials. LendingTree obtains their FICO score and then sends the application to loan providers in their network who cater to consumers with that level of creditworthiness.
  • LendingTree makes it easy to compare loan terms and get lenders to compete for your business.
  • Some borrowers complain of getting inundated with calls or emails, although the company says you can take steps to mitigate that result by simply withholding your phone number when entering your personal information.

What Is LendingTree?

LendingTree is not a mortgage provider, nor is it a broker. Like a broker, the company connects consumers with multiple banks and loan companies. However, LendingTree doesn't steer you through the mortgage process like a broker does, but rather serves as a lead-generation tool that allows lenders to essentially bid on homebuyers and refinancers who fit their criteria. Nor does it charge a fee as a percentage of the loan amount as a broker would.

Founded in 1996, LendingTree describes itself as an "online lending marketplace." The platform allows users to connect with multiple loan operators to find optimal terms for a variety of loans, credit cards, deposit accounts, and insurance. It takes the borrower's home loan request and submits it to multiple banks and mortgage companies within its vast network (it performs a similar function for auto loans, personal loans, and various other financial products). These lenders then compete for the borrower's business. LendingTree's selling point is that competition drives down prices, so mortgage bankers and brokers theoretically offer lower rates and fees when they know they are in direct competition with several others.

How the LendingTree Process Works

The first step to obtaining a LendingTree mortgage is to submit a loan request, either on the company's website or by calling its 800 number. You're asked a series of questions about the amount and type of loan you're seeking (such as purchase, refinance, home equity, or reverse mortgage) as well as information about your income, assets, and debts. LendingTree also asks for your Social Security number, which the company uses to obtain your credit score via a soft credit pull.

It's important to note that the information you provide LendingTree does not constitute a formal application (that's completed through one of the lenders, should you accept an offer). As a lending marketplace, the company does not make any approval decisions itself. Rather, it passes your information along to its network of lenders, who decide whether or not to extend an offer based on their loan criteria.

According to LendingTree, you may get preliminary quotes from up to five lenders, often within a few minutes, via email. Some banks and mortgage companies favor borrowers with a credit score in the good or very good range, while others are able to work with scores in the 620 to 640 range, even as low as 580.

However, one of LendingTree's strengths, the ability for lenders to compete for your business, can also be one of its drawbacks. Some borrowers report receiving a flood of calls from LendingTree-affiliated lenders almost immediately. It can be a jarring experience for the unprepared. There are ways to keep mortgage providers from aggressively calling and emailing you but you will need to review their privacy policy.

Borrowers should be careful to compare all of their quotes before proceeding with the lender's application process, which may require ponying up for an application fee, interest rate lock fee, and/or appraisal fee. Moreover, in many cases, a lender is miraculously able to come up with a better deal when a borrower calls back to say that a subsequent lender beat their quote. This is another advantage of LendingTree: It makes the process easy for a borrower to play several lenders against one another to get the best deal.

How Does LendingTree Make Money?

One of the advantages of using LendingTree is that submitting a loan request is free to the prospective borrower. When you use a broker, either you or the lender has to pay a fee based on the amount of the loan.

That doesn't happen with LendingTree. Instead, banks and specialty mortgage lenders pay the company to be a part of its network. LendingTree provides them with valuable leads, so they're willing to cover the costs of obtaining those loan requests.

One can argue that those business costs are built into the rate they offer you. Does that mean their lenders charge higher rates than the competition, though? Maybe yes, maybe no. The only way to really know that you're getting the best deal is by comparing quotes from one or more lenders outside of its network.

Even though LendingTree is free to the consumer, when you decide to accept a lender's offer, you can expect the same charges you'd normally face when getting a mortgage, like processing fees, appraisal fees, and title fees.

Comparing Offers

Anytime you receive loan offers from multiple lenders, you need to perform an apples-to-apples comparison to ensure you choose the one that's right for you. In addition to looking at the interest rate, you should also see whether the bank or mortgage company is charging you prepaid interest (called points) and evaluate the loan amount, the loan term, and any fees. If a lender comes in with a lower rate than the others do, for example, you should know whether that's because they're charging you points that the competitors aren't or squeezing you into a loan with a shorter duration.

Comparing mortgages by comparing the Annual Percentage Rate (APR) on each mortgage can help you make a real cost comparison between loan estimates with wildly different interest rates, fees, and points.

Keep in mind that even though you may receive offers from multiple lenders associated with LendingTree, it may not hurt to get outside quotes directly from a credit union, a bank, or a mortgage broker as well. If you do go outside the LendingTree network, you'll want to complete all your inquiries within a 30-day period, so that they will have less of an impact on your credit score.

Your initial inquiry to LendingTree is a soft inquiry into your credit score. However, each lender that contacts you may make their own hard credit pull. Multiple hard inquiries within a 30-day period are still counted as one on your credit score. If you're planning on comparing multiple LendingTree lenders and non-LendingTree lenders, make sure you do so within a 30-day window to avoid having a negative impact on your credit score.

Benefits of Using LendingTree

For anyone looking to obtain a mortgage, refinance, or take out a home equity loan, gathering quotes from multiple lenders is a must. LendingTree makes comparison-shopping quick and relatively painless, due to its streamlined loan request process. Users will find out whether they qualify for a loan, and what the terms are, in about as much time as it takes to fry an egg.

And because you're likely getting several offers back to back, you can try to haggle with lenders in the hopes of dropping the interest rate or lowering the closing costs. You may just find yourself with a better loan offer than the one with which you started.

LendingTree and Lending Club

Despite the very similar names, LendingTree and Lending Club are two completely separate entities. Lending Club is a peer-to-peer online lending platform where private investors connect with borrowers and does not offer mortgages. LendingTree is essentially an online referral service for multiple loan products including mortgages.

LendingTree Disadvantages

LendingTree offers several benefits, and borrowers who know how to make the most of the service might just walk away with a better mortgage deal than they would have gotten by working with only one lender.

However, using LendingTree comes with a couple of drawbacks. Perhaps the biggest frustration voiced by LendingTree customers is they end up inundated with phone calls and emails. Those loan officers have a huge financial incentive to earn the business of each borrower lead they contact. Therefore, it is unlikely they will call the borrower just once, make their pitch, and then hope they get chosen. A more likely scenario is that the borrower has several hungry salespeople calling and emailing at all hours of the day to shoulder their way in front of their competitors.

In fact, some online reviewers claim they've been contacted by more than five lenders. Indeed, a LendingTree privacy policy dated January 2020 acknowledges that the company may sell your information, including your Social Security number and credit history, to affiliated and non-affiliated companies alike. Consumers can limit that sharing, but they have to contact the company online or call 888-272-1355 to do so.

When contacted by Investopedia, a LendingTree spokesperson noted that there are relatively easy ways for privacy-minded consumers to keep their phones from constantly ringing. One is to simply withhold your phone number when entering your personal information through the website. The other is to use the company's mobile app, which provides greater anonymity than the website does.

"If a borrower would prefer to not speak with a lender, LendingTree's myLendingTree app experience is 100% powered by borrower selection or 'self-select,' meaning that the borrower initiates contact instead of lenders calling the borrower," the spokesperson said in a statement. "Consumers still receive real offers from lenders through this avenue."

Borrowers who do receive calls or emails from LendingTree partners will want to perform due diligence before deciding to accept an offer. Though some of the banks in their network are well-known names, others are companies that may be unfamiliar.

"Big versus small doesn't necessarily equate to better or worse," says Colin Robertson, who runs a blog called The Truth About Mortgage. Still, Robertson cautions users to Google the company before proceeding. If the company gets a failing grade from the Better Business Bureau, for instance, it would be advisable to steer clear.

Also, look out for any lenders who contact you asking for a fee to "guarantee" or "insure" a loan. According to the company's website, lenders from its network will never ask you for anything of the kind. Though legitimate lenders can charge application fees and appraisal fees, for example, LendingTree recommends paying those using a credit card so you have a digital record.

LendingTree vs. Rocket Mortgage

It is best to think of LendingTree as a concierge or referral service. LendingTree itself doesn't offer loans, it instead collects your information and gives it to people who do. Rocket Mortgage on the other hand is a one-stop lender that offers a wide variety of loans with competitive rates and terms through a streamlined lending process.

Do Users Pay Fees to Use LendingTree?

No. The platform does not charge any fee for its service of matching borrowers with lenders, nor will any lenders a user is matched with through the site ask for any upfront fees to “guarantee” or “insure” a loan.

What Happens If I Am Not Matched With a Lender?

Users are notified almost immediately if the service can't find a lender who meets their needs. LendingTree encourages users to return and complete a new loan request because they continually add new lenders to their network.

When I Get an Offer, Do I Have to Accept It?

No. You are under no obligation to accept a loan offer.

What Credit Score Does LendingTree Require?

LendingTree works with a wide range of lenders and does not publish a minimum credit score. However, borrowers with low credit scores are considered high-risk borrowers and will pay higher interest rates and generally be offered less desirable loan terms.

Does LendingTree offer other kinds of home loans?

LendingTree refers borrowers to lenders who offer a wide range of loans including, but not limited to, conventional loans, VA loans, USDA loans, FHA loans, construction loans, and jumbo loans.

The Bottom Line

LendingTree offers a fast and free way to get multiple mortgage quotes. But anyone expecting a hassle-free experience is cautioned to use the myLendingTree app, which the company says will keep lenders from calling or emailing you without your consent. Ultimately, the online loan marketplace makes the most sense for customers who want a quick response and don't need the guidance that a broker can provide.

Article Sources
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