Loan Depot Review
Founded by one of the best-known names in the world of lending, Loan Depot, which bills itself as a “national, non-bank lender serving consumers,” started out by offering mortgage loans and refinance loans. About a year ago, the company branched out to start offering personal loans too, and home equity loans are also counted among its offerings. In this Loan Depot review, we’ll take a look at how this non-traditional lender handles the processing and handling of the loans that it provides to help you make an informed decision.
As you may have already discovered, online Loan Depot reviews are very mixed. A lot of this has to do with confusion surrounding what this lender is all about. Contrary to what many believe, Loan Depot is not a non-traditional lender in the sense that they offer loans to people with bad credit. Rather, they’re non-traditional in that they are a non-bank–and in that much of the loan approval process is handled online. Additionally, Loan Depot is a direct lender–not a comparison shopping site. If you are looking for options from an array of lenders, you should look elsewhere.
About Loan Depot
Loan Depot was founded in 2010 to act as a fair and ethical lending company with a customer-focused approach. Back when it was founded, it focused exclusively on mortgage loans. One of the company’s co-founders, Anthony Hsieh, is well-known and well-regarded within the industry. Hseih has previously helped to found other major online lending companies, including Lending Tree and LoansDirect.com. The fact that the talent behind Loan Depot is seasoned and well-regarded is a major plus.
A national, non-bank lender that serves consumers, Loan Depot is headquartered in Foothill Ranch, California. The company currently employs more than 5,200 people, including more than 1,700 licensed loan officers, and it is licensed in all 50 states. Loan Depot also operates more than 150 loan stores across the country under the brands iMortgage and Mortgage Master. This allows Loan Depot to offer consumers the option of conducting their business on a face-to-face level, which is excellent for those who just don’t feel safe about applying for and receiving loans over the internet.
Despite its relative newness, Loan Depot has grown exponentially within the last five years. In the 12 months leading up to June 30, 2015, the company originated around $22 billion in loans. The vast majority were mortgage loans, but the personal loan business is sure to pick up steam before too long. It was only introduced in May 2015, so it is still among the company’s latest offerings.
Loan Depot is the second-largest non-bank consumer lender in the United States. Considering that it was only founded in 2010, this is a major accomplishment. The company provides home purchase mortgage loans, refinance loans, home equity line of credit loans and, most recently, unsecured personal loans. The company processes most of these loans at least partially online. With the exception of personal loans, however, closings, appraisals and other business must still be conducted in person.
Since Loan Depot only rolled out its personal loan services about a year and a half ago, the lender is still fine-tuning its processes. This is most likely why there are so many negative Loan Depot reviews out there. Many folks misunderstand what the company’s personal loan services are about. More specifically, people often assume that Loan Depot specializes in lending to high-risk consumers, but that is not the case at all.
Loan Depot offers personal, unsecured loans of up to $35,000. You can test the waters without putting your credit score at risk by requesting a no-risk quote, which includes the interest rate that you are pre-approved for.
About Personal Loans by Loan Depot
One thing that sets Loan Depot apart from the competition is the proprietary technology that it uses to process loans. The company describes the technology as providing “fast, easy, transparent decision making” for consumers who need personal, unsecured loans. The main draw here is that you can apply for and be approved for a personal, unsecured loan from home–there is no need to visit a bank or other traditional lender. This naturally saves a great deal of time, but it in no way means that people with bad credit are approved for such loans. Many other lenders specialize in lending to high-risk consumers, but Loan Depot is not one of them.
What Can Loan Depot Personal Loans Be Used For?
During the application process, you will be asked why you need a personal loan. The company approves loans for just about any purpose, but there are a few exceptions. Most people seek personal loans to consolidate debt, to finance home improvements, to pay for a vacation, to pay off high-interest credit cards or to finance a small business. These are all things that the lender will approve.
Personal loans from Loan Depot may not be used to pay for post-secondary education costs of any kind, including tuition, room and board or books. They may not be used for investment activities or to finance illegal activities of any kind.
To be eligible for a personal, unsecured loan from Loan Depot, you must meet the following criteria:
- at least 18 years of age, or at least 19 years of age in Alabama and Nebraska
- U.S. citizen or documented U.S. permanent resident
- valid email address
- verifiable income and bank account
- must meet credit criteria requirements–in other words, your credit must be good enough
The Loan Depot Personal Loan Process
The personal loan process through Loan Depot is initiated by requesting an initial quote. For this, you must provide your name, date of birth, mailing address and email address. Loan Depot then does a “soft inquiry” to generate a quote for your approved interest rate. Soft inquiries don’t impact your credit, which is a big plus.
If you agree with the quote and want to proceed, you enter the verification stage. At this point, you will be asked to provide more information, including your social security number, bank account information and employment details. You may also be asked to provide documentation to back up your claims, including your government-issued ID, bank statements, pay stubs or W-2 information. If you are self-employed, additional documentation may be necessary.
Once your documents are uploaded, it takes two to three business days for them to be reviewed. Assuming that you are approved, the loan is deposited directly into your bank account within two to three days after approval.
Repaying Your Loan Depot Personal Loan
When you take out a personal loan with Loan Depot, you don’t have to worry about forgetting to make your payments because they are automatically deducted from your bank account. The due date is based on the date on which the loan was initially funded. Luckily, Loan Depot gives customers a 15-day grace period for making payments, so you do have a little wiggle-room. However, you are not permitted to change the date on which payments are deducted.
Loan Depot charges an origination fee that is equal to 1 to 5 percent of the total amount of the loan. This fee is deducted from your loan, so you don’t have to pay it out of pocket. However, this means that you must account for the cost of the origination fee when requesting your loan, or you may not receive enough money.
The company also charges fees for late payments, missed payments and non-payment. If you still haven’t made a payment by the 16th day, a $15 late fee is assessed. There is also a $15 fee for failed payments, where your bank account lacks the funds to make the payment. Needless to say, you are likely to be slapped with a fee of at least $30, since payments are automatically deducted. The company urges consumers to contact them immediately if they are going to have trouble making their payments.
In many regards, mortgage loans are the bread and butter of Loan Depot. The vast majority of their business is rooted in them, so it is safe to say that they know what they are doing. However, they don’t come close to approaching the volume of true behemoths like Quicken Loans.
As a direct market lender, Loan Depot handles the entire mortgage home loan process. The company claims that this allows them to close loans up to 50 percent faster than other lenders.
The first step in acquiring a mortgage loan from Loan Depot is to use their mortgage calculator and affordability calculator to determine how much you can afford. These calculators have you input information like the total amount of the mortgage, the length of the term in years and the interest rate. You are then given a wealth of information, including the total amount you will pay including interest, the total amount of interest that you’ll pay over the life of your loan, and the amount of your monthly payments.
Types of Home Loans
Loan Depot offers a complete array of home loan products, ensuring that there is an option for every need and every budget. The loans that are offered by this lender include:
- fixed-term loans
- adjustable-rate mortgages
- jumbo home loans
- FHA loans
- VA loans
Because Loan Depot offers so many government-backed, or agency-backed, loans, it adheres quite closely to traditional underwriting standards. In this way, Loan Depot is a far cry from a typical alternative lender. Consumers who don’t have the right credit profiles will not be approved for mortgage loans.
The Mortgage Loan Process
Loan Depot prides itself on having a “no steering” policy, which means that they don’t pressure consumers into choosing any particular loan. Their mortgage loan process is fairly standard and not unlike those used by traditional lenders.
The first step is to submit your information online. If you’re not comfortable with that, you can call and speak to a mortgage banker. Either way, Loan Depot will give you recommendations based on the information that you provide.
If you choose one of the recommended loan products, you will have to confirm the program itself, the interest rate and the payment amount. The next step is to lock in the interest rate by signing a lock agreement and by providing a lock deposit fee, which is credited toward your closing costs later.
Next, you must submit documents. The company helpfully provides a mortgage document checklist that you can refer to. Documents can be faxed or emailed. Curiously enough, Loan Depot has no online uploading feature, which is offered by many other lenders of their caliber.
Your assigned account manager will then take it from there. They will coordinate the entire loan process for you, including opening escrow, ordering preliminary title reports and submitting everything to the underwriter.
You can close your loan, which requires signing tons of documents, right from home. You can also opt to take care of this at an approved meeting place, which is usually one of the company’s loan stores. Loans typically close about three days after this.
Loan Depot also offers home refinancing loans. You can use the refinancing calculator to get a feel for what you qualify for. As with mortgage loans, you can use the instant rate quote form to get a ballpark idea of what you may be eligible for. You must select the term, which may be 10, 15, 20 or 30 years. From the drop-down menu, select the type of loan. Input the value of the home, the mortgage balance and your credit score and submit the form. You will be contacted by Loan Depot later regarding your eligibility.
One of the most unique things about home purchase and refinancing loans through Loan Depot is that they are backed up by a Lifetime Guarantee. Once you have been financed or refinanced one time, all subsequent lender fees will be waived. You will also be reimbursed for appraisal fees. This is one thing that really makes Loan Depot stand out from its closest competitors.
Home Equity Loans
Unlike one of its top competitors, Quicken Loans, Loan Depot offers home equity loans, which they refer to as “fixed-rate second mortgages.” You can access up to 90 percent of the value of your home’s equity through such a loan. If you have $100,000 in equity, then, you may be able to borrow up to $90,000.
Loan Depot offers home equity loans for $25,000 to $250,000. They offer fixed-term loans of up to 15 years, and the home equity loan, or second mortgage, won’t affect the rate of the first mortgage.
One of the best things about home equity loans from Loan Depot is that they usually close within a few days, which is much faster than most traditional lenders. Therefore, if you need cash quickly, this may be the way to go.
Although Loan Depot conducts much of its business online, it falls a bit short compared with other lenders in this regard. For whatever reason, you may find yourself on the phone with Loan Depot more often than not, as many aspects of applying for loans necessitate telephone calls.
Is this because Loan Depot doesn’t offer a safe online experience? Not at all. The company has all of its security certificates, and all of its transactions are protected. The company would not last long if its online environment was not secure.
Considering the amount of money that is typically lent through Loan Depot, it stands to reason that they would offer many customer support options. They do, but they may not be as effective as they initially appear.
If you end up needing help, you can contact customer support via telephone, email or chat. Telephone support is quite solid, and you don’t usually have to wait on hold for too long. Email support is a bit spottier, as it can take a while to get a response. Live chat is great when it works, but there are many complaints out there about the live chat feature not functioning at random times.
Loan Depot provides many ways for customers to help themselves through its Knowledge Cafe, as it is known. This is essentially a knowledge base area that includes a wealth of content regarding the different types of loans that they provide. This content is mostly made up of articles, but there is a section of informational videos too. The website also includes several FAQs covering various aspects of taking out loans through Loan Depot.
Before taking out loans of any kind from any lender, it is crucial to investigate its reputation. Loan Depot’s is something of a mixed bag.
On the one hand, the company has an A+ rating from the Better Business Bureau. Around 77 percent of the reviews from BBB are positive, which is encouraging. However, if you look at Loan Depot reviews on sites like Yelp, they are overwhelmingly negative.
As always, it is important to put Loan Depot reviews into context when reviewing them. Oftentimes, negative reviews come from people who misunderstood the way the company operates. As mentioned before, many people are under the impression that Loan Depot covers loans for high-risk consumers, which is completely false. Unfortunately, many people who are turned down for loans take to the internet to post negative Loan Depot reviews. With all of that being said, some negative reviews are probably legitimate and should be taken under careful consideration.
Some of the top advantages of taking out loans from Loan Depot include:
- A+ rating with the BBB
- Second-largest non-bank consumer lender in U.S.
- Focused on fair and ethical lending
- Owns more than 150 loan stores across the country
- All loans funded by Cross River Bank, a NJ commercial bank
- Proprietary technology speeds up approval process
- Quotes don’t affect credit
- Mortgage bankers are state and federally licensed in accordance with the federal government’s S.A.F.E. Act.
Some of the top drawbacks of doing business with Loan Depot include:
- Uses traditional underwriting practices, so you must have fairly good credit to be eligible
- Despite having an online platform, much of the work must be done over the phone
- No online document uploading–documents must be faxed or emailed
- Origination fees can be hefty depending on creditworthiness
- No wiggle room for repayment due dates
- Co-signers are not allowed
- Customer support is lacking in some regards
- Lots of negative Loan Depot reviews on sites like Yelp
The Bottom Line
So, is Loan Depot worth your while? That depends. If you have not-so-great credit, you should probably not bother applying for loans with this company. If you have stellar credit, you may get better deals elsewhere, so be sure to shop around.
On the plus side, Loan Depot is backed up by some of the best-known names in the industry, and it has created quite a name for itself during its brief existence. These attributes make it stand out from other internet-based lenders, which often come across as being a bit fly-by-night.
Because every person’s situation and needs are different, it is wise to check as many Loan Depot reviews as you can before deciding whether or not to do business with them. One person may have a bad experience, but the next may have no problems at all. By reading as many Loan Depot reviews as you can, you can get a much better feel for whether or not this lender is right for you.