LoanDepot Review 2019
Ideal for borrowers looking to get a mortgage with help from a loan officer. Digital back-office operations are said to add efficiency to the loan process.
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The Bottom Line: An early mover in online lending, loanDepot scores well for customer service, though published mortgage rates are heavy in fees.
Pros & Cons
- Offers digital income, asset and employment verification.
- Has over 150 affiliated loan stores nationwide for customers who prefer face-to-face service.
- One of the nation’s most active lenders of FHA and VA loans.
- Published mortgage rates include up to 3 points of prepaid interest and fees.
- Does not offer home equity loans or lines of credit.
Through founder Anthony Hsieh, loanDepot can trace its roots to the earliest days of online mortgage lending. Hsieh was making home loans in the late 1990s through a company he co-founded called LoansDirect.com — back in the big-box desktop days of computers. That’s when a smartphone was the one attached to a fax machine.
Yet loanDepot is not your typical online lender. Most of your home loan experience will likely happen by talking, not tapping on your phone.
LoanDepot mortgage products
LoanDepot has a good menu of mortgage products: fixed- and adjustable-rate loans for purchases and refinances, jumbo loans and loans backed by the Federal Housing Administration and the Department of Veterans Affairs. One government-backed mortgage not available: USDA Rural Development loans.
Yet loanDepot ranks as the second-largest lender of FHA loans and the fifth-largest lender of VA-guaranteed mortgages, according to the latest available data.
Renovation loans are another focus for loanDepot, offering FHA 203k fixer-upper loans and Fannie Mae HomeStyle home improvement loans. Both programs allow the flexibility to buy and improve a home with just one loan. You can also use these loans to refinance your existing mortgage and do some remodeling, too.
» MORE: Monitor your credit score
The loanDepot mortgage process
Referrals from home builders account for about half of loanDepot’s purchase loan business, the lender says. For those of us who aren’t using a builder to construct and finance our home, the mortgage process will likely begin with a phone call, unless you have an affiliated branch near you. The company is licensed in all 50 states and the District of Columbia and has over 150 local loan locations across the U.S.
An $80 million upgrade to its back-office operations allows loanDepot’s loan officers to digitally verify income, asset, and employment as well as conduct credit checks. The lender says its proprietary technology saves time and reduces costs across the loan process.
On the Mortgage Preapproval page, you provide information as to whether you’re seeking a purchase or refinance loan, the loan amount and home’s estimated value, and where the property is located. It’s really just the beginning of the loan preapproval process, though. You won’t complete a full application on this page and immediately receive a preapproval letter, you are simply requesting a callback from a loan officer who will give you a personalized interest rate quote.
» MORE: Use our mortgage calculator to find out your monthly mortgage payment.
LoanDepot mortgage rates and fees
LoanDepot does publish interest rates online. Selecting “Compare Mortgage Rates” toward the bottom of loanDepot’s website takes you to a display of interest rates for 5/1 ARMs and 15- and 30-year fixed home loans. The thing is, these rates can’t be customized for your location or credit score, so it’s extremely likely your actual rate will vary.
Perhaps even more important, the rate assumptions are based on a borrower with a credit score of 740 or higher and a debt-to-income ratio of 35% or lower.
The big factor, though, is that the loan shown may include up to 3% in fees and discount points. Points are interest you prepay to lower your rate. LoanDepot provides no further details, so you have no way of knowing how much is being charged in fees or how many discount points are being used to lower the rate.
As for the fees you’ll pay, loanDepot gives itself a wide spread to work within. In reply to a February 2017 NerdWallet question asking about typical lender’s fees, Loan Depot said that they could range between 1% and 5% of the total loan amount. As of April 2019, the company had not responded to requests for updated information.
While a fee of 1% is not uncommon among lenders, anything north of that, especially in the 3% to 5% range, is far higher than normal. Total lender fees and discount points for the industry have averaged under 1% since 2001, according to survey data from Freddie Mac.
But loanDepot does have an interesting angle on future fees — what it refers to as a “lifetime guarantee” on subsequent refinances.
On the website, it describes the promise this way: “Finance with us once and never pay lender fees again.” LoanDepot will also reimburse your appraisal fee.
The guarantee is strictly for a loan secured by the same property that they originally financed, and there are certain other restrictions. For example, you have to qualify for future refis; loan approval and your interest rate aren’t guaranteed. And you have to hold on to a certificate to redeem when you decide to refi again.
LoanDepot customer satisfaction
According to a NerdWallet analysis of complaints filed in 2017 with the Consumer Financial Protection Bureau, loanDepot had below-average complaint volume among comparably-sized lenders.
And in the 2018 J.D. Power study of customer satisfaction among primary mortgage originators, loanDepot garnered a Power Circle rating of four (out of a possible five), which is classified as “better than most.” With a score of 847, above the industry average of 836, loanDepot was in the upper third among the 21 lenders included in the study.
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