Quicken Loans, the nation’s largest online mortgage lender, has a unique feature called the “Rate Drop Advantage.” Let’s take a closer look to better understand what they’re offering here, and if it’s compelling enough to choose them over another bank or broker.
In short, the proprietary loan program will pay most of your closing costs if you take out a purchase money mortgage or refinance loan with Quicken and then refinance with them again within seven years.
It’s a play on the fact that the “average American” moves or refinances their home loan every seven years.
Essentially, Quicken wants you to refinance now without having to worry about subsequent mortgage rate drops in the future. And they’re banking on you being one of the many that do something in that relatively short span.
So if you refinance now and mortgage rates fall, you can refinance again to take advantage of that rate drop with minimal mortgage-related closing costs.
What closing costs does Quicken pay?
To qualify for the Quicken Loans Rate Drop Advantage, you must close a mortgage with Quicken Loans by December 31, 2012.
The same loan must be refinanced between 120 days after closing to 84 months after closing.
It’s only valid once per mortgage with the same property address only.
And you must qualify per full credit and underwriting guidelines, so if you lose your job or your credit score goes down the tubes, you’d probably be out of luck.
Final Word on Rate Drop Advantage
If you’re going to refinance with Quicken Loans anyway, it’s a cool feature. But the chance of mortgage rates going any lower, at least significantly, is probably doubtful, given they’re at historic lows.
Additionally, it always pays to shop around to ensure you get the best mortgage rate, instead of picking one company for a feature you may or may not actually use.
For example, you might get saddled with a higher interest rate initially and never ever refinance, thereby just pay more for the many months or years you hold your mortgage.
I’m not a big fan of gimmicks, and prefer to stick to the lowest combination of rate and fees you can get right now, not what you might be able to get in the future if something happens.
*As with any product review, contact the company directly to ensure the above is still accurate, as terms change constantly.
The company’s latest venture is the so-called Rocket Mortgage, which relies on technology to speed up the loan process. As for whether that means you’ll land a lower interest rate is another question. It seems to be more about the process than offering the lowest price. But if you can get both, more power to you.