Ever hear of an eight-minute workout? How about an eight-minute mortgage?
Quicken Loans, the third-largest mortgage lender by marketshare, launched a new website called “Rocket Mortgage” last week that allows users to refinance or purchase a home in as little as eight minutes.
The service cuts out the conversation between loan officer and consumer, as the consumer inputs his or her financial information directly into Quicken’s database. Then, the website crunches the numbers like an underwriter would, and offers customizable, real-time rates to the site’s user.
Traditionally, it would take one week to several months to be approved for a housing loan, all of that, of course, after you’ve spent weeks shopping for that loan in the first place. But with Rocket Mortgage, shopping for a loan and applying for it is a process that requires little in the way of time and effort. (California homebuyers also have a speedy mortgage option via the new service Google Compare: Mortgage.)
Since the 2008 real estate bust, traditional lenders have had to compete with techies in Silicon Valley who wanted in on the housing recovery, as start-ups like Sindeo and Lenda — which claims that its clients save an average $8,000 in closing costs when they refinance with their service — try to streamline the residential mortgage process. Other websites and online tools have popped up to create more transparency for home shoppers and refinancers, and nearly anyone can crunch the numbers on a virtual mortgage rate calculator.
Though it only takes a few keystrokes to search for and use a mortgage calculator online or find a startup that’ll connect you with a lender, Rocket Mortgage Product Lead Regis Hadiaris says that nothing is as comprehensive as Quicken’s new service. Calculators use all kinds of assumptions about a consumer that may not hold true, and startups and other non-bank lending platforms don’t have the kind of reach that Quicken does, according to Hadiaris
“We can customize solutions based on income, assets, property, our products and pricing, interest rates, and underwriting guidelines,” Hadiaris says. “The system figures out the very best option for each client. No more assumptions. It’s true clarity in the process.”
Speed is Rocket Mortgage’s biggest selling point. But that doesn’t mean the eight minute-mortgage approval is the end of the home-buying road for consumers. The loan can close in a week, but is “only as fast as the slowest vendor, such as local municipalities and insurance companies,” TechCrunch reports.
Keith Gumbinger, vice president of mortgage and consumer lending information site HSH.com, isn’t convinced that a service like Rocket Mortgage will speed up the home buying process at all for inexperienced and first-time shoppers who may have questions that slow down the process.
“How much more quickly do you actually need to get a mortgage? In the case of a purchase, few borrowers are ready to go, pack up and move in as little as eight minutes, let alone two hours or two weeks,” Gumbinger says. “Having your financing in place more quickly may be of some benefit but may not change the timeframe.”
Rocket Mortgage’s website says that the platform has bank-level encryption and 24/7 security monitoring, but Gumbinger also worries that volunteering personal financial information to a third party creates new ways for a buyer’s financial and personal data to be compromised.
“To just allow some outside party to go through, traipsing through your personal finances, just to get a rate on a mortgage, there’s that and the concern of not necessarily knowing what you’re getting yourself into,” he says.
Of course, you’re not committing to anything through the service unless you reach the end of the process and choose to lock in your rate (after you’ve been approved). And you can call a Quicken Loans representative to help you through the easy-to-use program if you’re confused about the kind of information that’s required. Of course, a step like this will slow down the process–not that that’s necessarily a bad thing.