SmartMortgage claims that to take out a mortgage using their service is both a faster and smarter alternative to traditional home loans. It is faster because SmartMortgage links the home loan to your current account, a service which saves time that otherwise may have been spent switching back and forth between tedious login screens. It's a convenience many other services have, however.
And is SmartMortgage smart? The service pits interest payable on your loan versus interest earned in order to effect more savings. If it seems too good to be true, don't necessarily skip it: Clever's low-commission realtors offer similar convention-flouting value which doesn't make sense to some people.
In the sections to follow, we'll contrast SmartMortgage against the option of traditional home loan to decide whether the latter option still holds water.
SmartMortgage vs. Traditional Banks
As was discussed previously, many home loan services these days--including some of those offered by traditional banks—successfully link your financial account to your home loan account. Such symmetry exists almost by definition for borrowers who borrow money from their regular bank. Rather, when it comes to obtaining a home loan, it's these three fiscal features which set SmartMortgage apart.
1. Early redemption
At most banks offering home loans, even a discounted loan carries the option to prepay the full sum and receive a percentage back as a sort of good faith rebate. This option is referred to as "early redemption" in the real estate industry and those who take advantage of it often find the peace of mind to be worth any extra fees they may incur.
With SmartMortgage, you are offered up-front a choice of lock-in or no lock-in periods of up to three years following the time of signing the mortgage. For your purposes, that means you can choose to keep redemption as a possible repayment avenue for later. SmartMortgage claims neither to offer cash back nor to take extra fees from the practice of early redemption.
2. Interest rates
A second purported benefit of SmartMortgage is its interest rates. Does SmartMortgage save money to those of its customers who take the full repayment period in their home loans? Here we have a case where what a company claims differs a shade from the full picture.
For background, it helps to know that SmartMortgage was founded and continues to operate as a division of Guild Mortgage, Inc. Guild Mortgage advertises itself as a top-ten lender and indeed garners much business from the big fish in real estate. As such, the question remains: why is SmartMortgage run as a separate business entity?
The answer may lie in the particulars of its interest rate deals to customers. There are two types of home loans—the larger of these being jumbo loans, home loans typically worth more than $500,000. For customers with jumbo loans, SmartMortgage caps yields from interest at a rate it's proud to show beats big banks by a hair.
If you were to choose a conventional loan from SmartMortgage, on the other hand, you'd be left with few benefits except for the convenience of linked accounts. Whether such savings merit a switch to the division of a larger company ultimately is your call.
3. Customer Service
The people behind SmartMortgage claim they set out to create the division as a "low-cost online lender with all the customer service advantages provided by a traditional brick and mortar mortgage bank." It's an interesting citation for a company which started off as a bigger company. Just how is it more efficient to operate a customer service department effectively serving as a division within a division?
While that much of the mystery remains unclear, SmartMortgage again delivers on its promise for slightly faster service than could be attained by traditional banks. Similar to its account linkage benefit, its 24/7 customer service line can be helpful for the fraction of buyers looking to secure a loan past midnight. Because it's rare that a home loan is a pressing issue, the gain from switching to SmartMortgage is marginal at best on the customer services front.
What's The Right Choice For You?
In the preceding sections, we have shown how SmartMortgage offers a strange admixture of marginal benefits and uncertainty surrounding its rates on lower-sum loans. In other words, if you're looking for flat out cost savings on a conventional loan, you may be best off running with a traditional bank. On the other hand, those in search of excellent customer service on a jumbo mortgage could do worse than a loan with SmartMortgage.
The fact of the matter is that there are dozens of online options for anyone looking for an improvement on the rates and services offered at their traditional bank. We've reviewed one here, and our Clever Partner Agents are well-versed on the ever-present range of options. Connect with an experienced real estate agent as a way to locally source more detail on how to go about obtaining a home loan right for you.