LoanDepot Review 2021

LoanDepot at a glance

A top-10 lender in refinance loan volume, loanDepot also offers a variety of purchase and renovation home loans. In 2019, loanDepot invested $80 million to upgrade its online application technology. Yet, it is one of the few nonbank mortgage lenders with a network of local offices to serve borrowers looking for a higher-touch loan process.

Here's a breakdown of loanDepot's overall score:

• Variety of loan types: 3 of 5 stars

• Variety of loan products: 5 of 5 stars

• Online convenience: 4 of 5 stars

• Rates and fees: 3 of 5 stars

• Rate transparency: 1 of 5 stars

» MORE: Compare loanDepot to other mortgage lenders

LoanDepot loan types and products

LoanDepot has a variety 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.

Renovation loans are another focus for loanDepot, which offers FHA 203(k) 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.

While a page on loanDepot's site says it provides second mortgages in the form of a fixed-rate home equity loan, TalkFinance cannot confirm such a product's availability. In two calls to customer service, reps steered the conversation to a cash-out refinance. A refinance replaces your existing loan; a second mortgage does not.

Speaking of refinancing, loanDepot does a lot of it. Together, standard and cash-out refinances accounted for over 60% of the lender's loan volume in 2019, according to Home Mortgage Disclosure Act data.

LoanDepot online convenience

LoanDepot's online application process is routed through the lender's 'mello smartloan' system. Originally put into place for back-office use, the digital mortgage platform is now consumer-facing as well.

The portal can verify financial and employment details for many users and can also perform credit checks and guide the appraisal process. The lender says its proprietary technology saves time and reduces costs across the loan process.

Document uploads and e-signature are available through mello, but TalkFinance could not verify whether applicants are automatically updated on their loan status via the system.

LoanDepot mortgage rates and fees

One of the most important considerations when choosing a mortgage lender is understanding what the loan will cost. To provide consumers with a general sense of what a lender might charge, TalkFinance scores lenders on two factors regarding fees and mortgage rates:

• A lender's average origination fee compared with the median of all lenders reporting under the Home Mortgage Disclosure Act. LoanDepot earns 3 of 5 stars on this factor.

• A lender's offered mortgage rates compared with the best available on comparable loans. LoanDepot earns 3 of 5 stars on this factor.

LoanDepot does have an interesting angle on future fees — what it refers to as a “lifetime guarantee” on subsequent refinances. The website describes the promise this way: “Finance with us once and never pay lender fees again.” LoanDepot also says it will reimburse your appraisal fee.

The guarantee is strictly for a loan secured by the same property originally financed by loanDepot, 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.

Borrowers should consider the balance between lender fees and mortgage rates. While it's not always the case, paying upfront fees can lower your mortgage interest rate. Some lenders will charge higher upfront fees to lower their advertised interest rate and make it more attractive. Some lenders just charge higher upfront fees.

You can decide to buy discount points — a fee paid with your closing costs — to reduce your mortgage rate.

Deciding whether to pay higher upfront fees is a matter of considering how long you plan to live in your home and how much cash you have to apply toward closing costs when you sign the loan paperwork.

» MORE: 'Should I buy points?' calculator

LoanDepot rate transparency

A search for sample mortgage rates on the loanDepot site is frustrating. There are a lot of false leads, including links that say "compare mortgage rates" and "30-year fixed mortgage rates" — but tapping on them takes you to loan term descriptions and explanations, not actual rates.

Ultimately, it appears that you have to contact a loan officer or start a loan application to get customized mortgage rates from loanDepot.

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