Zillow Home Loans Is Now Live

Following the announcement made last summer to acquire Mortgage Lenders of America, “Zillow Home Loans” is now officially open for business.

The new division of Zillow, which is 300 employees strong and operating out of Overland, Kansas, complements the company’s Zillow Offers platform, which acts as an iBuyer of homes in various regions of the country.

But the use of Zillow Home Loans is not restricted to just Zillow Offers’ home sales, per a company press release.

This means they’ll act as a full-scale mortgage lender, ostensibly offering both purchase and refinance loans to borrowers nationwide, regardless of whether they’re buying or selling a Zillow-owned home.

As to why they entered the competitive space, Zillow notes that obtaining a mortgage is often the “most complicated part of buying a home,” and so it’s eliminating that pain point. Or at least taking more control of it.

Doing so makes their business of buying and selling homes a lot more certain, seeing that they’ll control the financing piece if the customer chooses to use Zillow Home Loans.

They might even be able to get the home seller to use them for financing the replacement home purchase, while snagging the buyer’s financing of a Zillow Offers’ property at the same time.

There’s clearly a lot of upside here.

What Zillow Home Loans Offers

At the moment, they’re advertising four main types of home loans on their website, including:

– Conventional loans (those backed by Fannie Mae and Freddie Mac)
– FHA loans
– VA loans
– USDA loans

Those four cover the lion’s share of the mortgage market, with jumbo loans and reverse mortgages the only obvious absentees.

I gave their website a whirl and filled in what amounted to be a lead form, which asked all the basic questions like purchase or refinance, home value, loan amount, credit score, if I wanted fries with that, and so on.

I was feeling frisky so I even put in my email address and phone number, but sadly, upon completion they simply told me a loan officer would be in touch soon.

So there doesn’t seem to be any cool technology happening, at least not at the moment. I was hoping to get a real-time quote or be able to move along further in the process without having to speak to anyone.

After all, it’s all the rage these days to not speak to a human being, especially when it involves a major financial transaction. Oh well…

They Basically Exist to Serve the Zillow Offers Business

• Home loans business gives them more control of iBuying business
• Also creates a new source of profit for Zillow
• Will be similar to a home builder with its own financing department
• Whether they branch out beyond that to become a major player in mortgage space remains to be seen

If you search for a mortgage on Zillow, at least for the time being, you probably won’t see Zillow Home Loans listed in their lender marketplace.

Instead, you’ll come across lots of unaffiliated, third-party lenders that pay Zillow a fee for what amounts to a borrower lead.

That tells me Zillow Home Loans is mostly focused on the home buyers and sellers using its burgeoning Zillow Offers iBuyer service.

Their press release, which is titled, “Zillow Group launches Zillow Home Loans to Support Zillow Offers,” also makes this abundantly clear.

In other words, Zillow is acting much like the major home builders out there that tend to have their own financing departments.

Home builders with financing departments have very high attach rates, with most home buyers opting to just use the lender being thrown their way, especially if they’re worried about qualifying. Or if a first-time buyer.

Same thing happens with real estate agents by the way – they refer their buyers to a preferred mortgage broker or lender and that person/entity is often used.

Anyway, instead of relying on a third-party to offload their stable of properties to home buyers, Zillow can simply turn to their in-house lender.

This creates several advantages, one being reliability. Home buying and selling isn’t inherently difficult, but financing can often get in the way.

Having control of the lending piece means they can stay on track. And in doing so, they create a new line of profit as well.

It also works with their whole speed and convenience thing, which is the foundation of iBuying to begin with.

And they could convince more homeowners to use Zillow Offers if they bake in discounts for also using their financing.

Lastly, they have a good business in their lending marketplace, so they probably don’t want to cannibalize it.

Whether they eventually branch out to take a bigger chunk of the mortgage market remains to be seen, but that doesn’t appear to be the goal, at least not yet.

So we probably won’t see any fancy technology or innovative stuff like that of Rocket Mortgage and similar debutants looking to shake things up.

But as noted earlier, the new lender isn’t restricted to Zillow Offers’ home sales, and they appear to offer mortgage refinancing as well.

I guess why not if they’ve already got the platform up and running.