For the time being, S&P’s downgrade on United States debt has yet to produce an increase in mortgage interest rates as some predicted. Borrowers can still find mortgage loans for such a low cost that if they qualify, low interest rates combined with lower house prices would make owning a house more affordable than ever.
Even with low rates available from many lenders throughout the industry, it pays to shop around for a mortgage whether you’re buying a new house or refinancing a current loan rather than choosing the first option presented to you. The difference of a few tenths of a percentage point could result in either savings or an expense of several thousands of dollars over the life of the loan. While mortgage brokers may shop around for you and claim they are presenting you with the best options, it is always beneficial to do your own research.
Quicken Loans advertises some of the lowest rates available today. When I first heard of Quicken Loans, it was through my desktop Quicken software. I immediately thought that the lender was a branch of Intuit, the makers of the software. I didn’t see a reason the software company would have a business lending money.
They don’t, though. Intuit actually licenses the name “Quicken Loans” and the associated logos to Rock Holdings, the parent company of Quicken Loans. There’s no relationship between Quicken software and Quicken Loans other than this license and the ability for Quicken Loans to align itself in consumers’ minds with the incredibly popular and favorably-viewed financial management brand.
Looking past the brand name, Quicken Loans offers some interesting features. They offer more choices than the typical 30-year fixed rate, 15-year fixed rate, and adjustable rate mortgages, allowing borrowers to customize their loan to an extent that’s not available with most other lenders. If you need to borrow less than $417,000 for the purchase of a home or a refinance of up to 95% of your home’s value, you can take advantage of this flexibility.
You can choose a loan term anywhere from 8 to 30 years and qualify with as little as 5% down. I recommend putting at least 20% down on a mortgage, but some borrowers will still qualify with a smaller down payment. Quicken Loans offers a product called PMI Buster, optional for borrowers who have a down payment less than 20%. This helps the customer avoid paying mortgage insurance (Quicken Loans pays it for the customer) in exchange for a higher interest rate. Run the numbers to see if this is worthwhile; it may not be for everyone, but the home mortgage interest deduction helps make this product a choice to consider.
After 7 years of paying back a 30-year mortgage with Quicken Loans, you can refinance for a 23 year term. This would let you take advantage of potentially lower rates while not extending your initial repayment period. Will rates be lower in 7 years? It’s hard to imagine that they would be because rates are so low now, but it’s still a possibility.
The flexibility in choosing your term means that you can tailor the loan to your cash flow or if you plan to send your first child to college in 18 years, you can design the loan to end right before the first tuition bill is due.
In July and August 2010, J.D. Power and Associates conducted a consumer study and found that found that Quicken Loans is the highest-ranked lender for customer satisfaction, with a score of 826 out of 1,000. The next closest competitor scored 734.
If you’re shopping for a new mortgage or a refinance, include Quicken Loans in your comparisons. If you qualify for the low rates they advertise, you will benefit from increased cash flow for what will probably be a good chunk of the remainder of your life. Most mortgages last thirty years, and that’s a significant time commitment. Make the best decision you can by researching as much as possible.
Updated November 12, 2011 and originally published August 16, 2011.