A new app allows you to secure a mortgage from your phone in just 8 minutes. This is how it works.
You may now be able to secure a mortgage from your couch or, even, while waiting in line to pay for all those holiday gifts. Quicken Loans recently launched a self-service mortgage application that lets prospective borrowers receive full approval and lock in interest rates on conventional, Federal Housing Administration or Veterans Affairs home loans in less than 10 minutes online. It has dubbed the service a “rocket mortgage” in reference to “the eight minutes it takes a space shuttle to reach orbit.”
Keep in mind, that eight minutes refers to the mortgage approvalprocess. It’ll take a bit more time to actually close on the loan. The process, for instance, could still get slowed down if a homeowner or buyer delays other steps in the mortgage process, such as the appraisal. Quicken said that a majority of its loans do close, however, in 30 days or less.
How it works
The application process is expedited since the online mortgage lender uses data provided by various partners and sources to verify a borrower’s asset, property and income information — you don’t have to manually provide supporting loan documents. (You will be given the opportunity to review all of this data once it is imported, Quicken says.)
Borrowers are quoted rates based on Quicken Loans’ actual pricing for that moment. You are given the opportunity to compare and customize your interest rate, mortgage term, monthly payment and fees based on current underwriting guidelines and what type of product you are looking for or can afford. You can lock in your rate or abandon and restart the process at any time.
“With Rocket Mortgage, clients get real interest rates and recommendations based on their unique situation at that moment,” the company said in an email.
Mortgage shopping 101
Of course, a rocket mortgage (or an online mortgage in general) may not be for everyone. The service eliminates face-to-face interaction with mortgage lenders, which some consumers may value over convenience. (Quicken customers can a talk to a mortgage banker at any point in the process via chat or phone if they have questions, the company says.)
Also, you shouldn’t let the opportunity to get approved for a home so quickly preclude you from doing your due diligence. It’s still important to comparison-shop for a mortgage lender. You should also be serious about doing business with one before you apply since the application will generate a hard inquiry on your credit report and could subsequently hurt your score. (Many scoring models will count all mortgage inquiries as one, provided they take place within a 14- or 45-day period).
And, no matter which lender one you choose, it’s important that you check your credit before applying for a mortgage since a good one entitles you to the best terms and conditions. You can pull your credit reports for free each year at AnnualCreditReport.com and see your credit scores for free each month on Credit.com.
If your score is below a 620—Fannie Mae’s minimum score requirement—you may want to improve your credit before starting the application process. You can do so by scanning your credit report for errors, paying down high credit card balances and limiting unnecessary credit inquiries.