Credit Karma has just announced a new venture known as “Credit Karma Home Loans” that will present mortgage refinance offers to its millions of members.
The new rollout will be powered by Better Mortgage and its Tinman AI Platform.
When you log on to Credit Karma, you are typically presented with various credit offers related to your existing credit lines, whether it’s a new credit card or balance transfer offer.
Now those with an existing mortgage may see personalized offers on their account dashboard if there’s an opportunity to save money there too.
According to Credit Karma, millions of its members currently have mortgages and “many are paying interest rates over 6%.”
Credit Karma Home Loans Will Be Powered by Better Mortgage
A while back, Better Mortgage said it had some major deals in the works, including one unnamed financial platform.
Now we know who it is and it’s a biggie because Credit Karma has roughly 140 million users (by the way this is who I guessed it would be).
As noted, the new Credit Karma Home Loans division will be powered by third-party lender Better Mortgage.
However, it will act as a mortgage broker, meaning your refinance application may not necessarily go to that company.
Instead, the Credit Karma platform will scan for money-saving opportunities for its mortgage members “around the clock” among over 40 financial institutions.
And if something favorable is found, you’ll be notified when you visit the site to check your credit scores and/or credit report.
Similar to those credit card offers you already see when you log on, you might be presented with a rate and term refinance to save you X amount per month.
For example, if Credit Karma knows you have a $400,000 mortgage with an interest rate of 6.875%, they might present a refinance offer at current rates from one of their partners.
If they can get you a new rate of 5.875% instead, you’ll see the offer and associated savings, at which point you’ll be able to apply via the app.
They also allow you to review your credit profile for any issues that might affect your mortgage application.
How Are Credit Karma’s Mortgage Rates?
It’s important to point out that Credit Karma is simply acting as a broker here, similar to how they present offers from third-party credit card issuers, auto lenders, etc.
So you’ll be presented with the “best offers” from their mortgage lender partners, which possibly includes Better since they are a consumer-direct lender themselves.
While we don’t know how competitive the participating lenders will be, Credit Karma says through the use of technology they’ll be “able to reduce costs and pass those savings directly to our members in the form of better rates and lower monthly payments.”
Better has made this claim many times as well, arguing that it can cut the bloat and offer below-market rates as a result.
That said, this partnership will lean heavily on AI, with so-called “intelligent automation” streamlining loan eligibility, document retrieval, and loan underwriting.
Credit Karma members will apparently be able to get pre-approved for a mortgage in as a little as five clicks while interacting with Betsy, the first AI voice-based mortgage loan agent.
And through the Tinman AI Platform, your credit and property data will be shopped (I assume anonymously) across 40+ financial institutions and 1,500 loan products.
Their “data-driven approach ensures members are shown the program they’re actually approved for and the lowest rate and fee combinations available.”
The company believes it can remove friction that often prevents existing homeowners from even starting the refinance journey to begin with.
The end result will ideally be saving more homeowners money on mortgages they’re currently overpaying for.
Whether they eventually offer home purchase loans as well remains to be seen.
