Well, it’s official, there’s a new major mortgage player in town.
And they go by a familiar name, “Discover Home Loans.”
You may have heard a while back that the credit card issuer was getting into the mortgage game, and now their operations are officially live.
In case your were wondering, they scratched and clawed their way into the mortgage biz by acquiring the loan origination assets of Tree.com, formerly known as Lending Tree.
What Does Discover Home Loans Offer?
They offer mortgages. But seriously, they offer both fixed-rate and adjustable-rate conventional mortgages, along with FHA loans.
For ARMs, your options are limited to terms of three, five, and seven years. The popular 10-year ARM is notably absent.
It’s unclear if they will offer jumbo loans in the future.
What Makes Discover Unique?
Well, they claim to have a streamlined application process, meaning it should be easy to apply and get approved for your mortgage.
You can start the process online by putting in some basic information, and then a Discover “mortgage banker” will call you back. That same mortgage banker will be with you from start to finish.
Additionally, they allow you to securely upload documents and check the status of your loan 24/7, via their home loan lending website.
With regard to time, they offer a “Close on time guarantee” that promises they’ll get your loan funded as scheduled or give you a credit of up to $1,000 for closing costs.
And when you use them for a subsequent purchase or refinance, they will give you a “Welcome back bonus” credit of up to $2,000 that can be used toward closing costs.
New: They’re also offering a 5% cash back bonus to Discover cardmembers who put the appraisal deposit on their card, now through April 16, 2013.
How Are the Rates?
The all-important question…and really the only one most people care about, their mortgage rates.
I took a look at their rates online, and they’re currently advertising a 30-year fixed for 3.75%.
But you have to pay 1.375 in mortgage points. Additionally, the mortgage must be pure vanilla.
In other words, it has to be an owner-occupied, single family home, and the borrower must have a Fico score of 720 or higher.
Additionally, Discover appears to be advertising rates for loan-to-value ratios of 70%, which is not the standard 20% down, or 80% LTV.
So you’ve got to have a pretty pristine loan scenario to snag their advertised rates, which seem a tad high, especially with mortgage points being paid.
Where Does Discover Home Loans Do Business?
Currently, they appear to offer mortgages in 48 states, along with the District of Columbia. New York and Utah are absent from the list.
It’s unclear if these states will be added later as operations presumably expand, but if so, it will be noted here.
Perhaps it’s part of a soft roll-out to ensure everything works out as planned before getting into all 50 states. Or maybe it’s just a simple (or complex) licensing issue.
If you happen to reside in one of the states mentioned above, and want more information regarding Discover’s mortgage lending program, call them up at 1-888-866-1212.
It’ll be interesting to see how Discover navigates the mortgage market. They certainly have a ton of existing customer relationships to tap into, so they’ll be able to grow quickly, and perhaps make the mortgage market more competitive.
Though my guess is that they’ll offer slightly higher-than-market mortgage rates to existing credit card customers, and bank on their trust and reliability to get it all done.
They aren’t going to change the mortgage world as we know it.