Lenda has a single goal in mind: to simplify mortgage lending. The online lender is replacing the 1,200-page loan document stack with code and technology that delivers a loan estimate in six seconds instead of three days.
Although it offers only refinancing options at the moment, Lenda plans to include purchase loans by the end of 2016, says Jason van den Brand, Lenda’s CEO and co-founder. Operating in California and Washington with more states to come this year, Lenda is focused on improving the mortgage customer experience by making transparency its cornerstone.
AT A GLANCE
- Offers 30-, 20-, 15- and 10-year fixed loans.
- No origination fees or broker commissions.
- Minimum 640 credit score.
Lenda delivers what homeowners want
Lenda offers a digital refinancing experience that aims to be transparent and save customers money. When you apply for a mortgage refinance with Lenda, you can see how your loan is progressing at each stage in the process. Lenda doesn’t charge a loan origination fee and you won’t pay a broker commission, which takes some of the financial weight off your shoulders at closing, van den Brand says.
To make money, Lenda adds its costs into the interest rate, van den Brand says. Even so, its model, which keeps costs low by limiting staff and cutting paperwork compared with a traditional refinance or purchase transaction, allows Lenda to compete with bigger lenders on interest rates, he says.
Lenda hopes to appeal to millennials, who, as digital natives, are accustomed to doing business online. The traditional lending model may strike these borrowers as too paper-heavy, lengthy and cumbersome, van den Brand says, adding that it’s also unnecessarily expensive.
“There’s a huge opportunity in this market. Our demographic doesn’t want to do things the way they’ve always been done in the mortgage industry. They want it all online,” he says.
How it works
The San Francisco-based lender’s digital platform boils down mortgage borrowing to four factors: credit history, documentation, underwriting and regulatory compliance.
When borrowers enter their personal information into Lenda’s system, they have almost instant access to their credit score and can view any problems with their credit, which affects their mortgage rate and helps determine how big a loan they can qualify for. That automation eliminates the need to pay someone a commission to perform an analysis manually, van den Brand says.
A step-by-step guide to using Lenda
- Home page — On Lenda.com, click on “See My Rates.” You’ll answer some basic information about your current loan and refinance goals.
- Rate quote page — You’ll provide five pieces of information: your primary refinance goal (that is, why you want to refinance your loan), how much you owe on your current mortgage, your home’s estimated value, your ZIP code and a credit score range. You’ll be prompted to provide your email address and a password to create a free account before you can see your rates.
- Rate comparison page — On this page, you’ll see rate comparisons based on the information you provided (without having to supply a Social Security number or personal details such as your name or employment information). Lenda provides upfront information about any fees you might incur for the loans quoted. You can also adjust (in real time) your rate and term, whether you want to finance closing costs, or if you want to use an escrow/impound account.
- Lenda suggestion engine — The suggestion engine will look at your inputs and determine if there are things you can do to lower your rate. This feature is unique to Lenda among mortgage lenders, says Chris Hiestand, the company’s director of marketing and growth.
- Additional loan details — The more information you provide about your current mortgage and financial situation, the more accurate your loan estimate becomes. Lenda also calculates your total refinance savings.
- Loan application — You’ll fill out this streamlined application by answering questions that are relevant only to the approval process. For example, Lenda won’t ask questions about race, religion or ethnicity that could be used to discriminate against potential borrowers.
- Credit check — You’ll get a free credit check to see where you stand.
- Disclosure documents — The loan estimate and disclosure documents are generated online and can be reviewed and signed electronically.
- Upload documents — You’ll see a checklist of documents you need to gather to complete your loan application. Once you find those documents — for example, tax forms, bank statements and pay stubs — you’ll securely upload them to Lenda in one spot. (There’s also a drag-and-drop feature, which makes it easier if you already have them online.) Once your documents are uploaded, the application is complete; Lenda’s team reviews it for accuracy and will contact you if further information is needed. The next step is having an appraisal scheduled.
Borrowers have round-the-clock access to their loan application and status updates via Lenda’s Client Dashboard, and the company provides a loan advisor you can contact with questions or for help.
Who is it for?
Lenda is ideal for tech-savvy homeowners who have higher incomes, good-to-excellent credit and a straightforward refinance application. The average age of a Lenda customer in 2015 was 41, and it’s trending downward.
Where Lenda shines
- Speed: Lenda closes loans in an average of 41 days.
- No upfront origination or broker fees.
- 24/7 access to your loan and its progress.
- Transparent platform that automates (and shortens) the refinance process.
Where it falls short
- Offers only refinance loans at this time.
- Currently operates in just two states (California and Washington).
- Doesn’t offer government products (FHA, VA or USDA).
- Doesn’t work with jumbo loan clients.
Deborah Kearns is a staff writer at NerdWallet, a personal finance website. Email: dkearns@nerdwallet.com. Twitter: @debbie_kearns.
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