Stem Lending helps consumers shop for a mortgage. In other words, it's a mortgage brokerage. There are literally thousands of mortgage industry professionals out there, trying to do the same. But Stem Lending isn't just another one of them. So what’s so special about it then?
We are on a mission to help make mortgage shopping more convenient, transparent, and cheaper for home buyers.
And how do we plan to do that? Well, that’s what this post is about. Read on and you’ll come across some alarming nuggets of information you probably did not have.
Let’s first understand how the industry functions currently
When one needs a mortgage, many ask friends and colleagues for recommendations.
Let’s stop there for a moment.
What? Even in today’s digital age, where information is abundant and resources to get information are unlimited?
Yes. In fact, that is the essence of the problem. The emphasis here is on the word “abundant”.
With information abundance comes a lot of noise
Real estate is a large portion of the US GDP. Since most homes are bought by taking loans, ‘massive’ is the word used to describe the size of the mortgage industry.
With that large a size, there ought to be an army of participant entities (banks, lenders, brokers et al). And an army can make a lot of noise to corrupt real information.
The bigger the entity, the more firepower it has to create that noise. And the more noise in the system, the harder it is to get to the information you are looking for.
But that’s the case in every industry. What’s the difference?
In one word, transparency.
When you browse around and like a product on a website, you can quickly search for that product on online search engines and you’ll see all other websites selling it, and for how much. Based on price, service and other factors, you can choose which vendor you like the most, click, pay, and you are done. It’s that simple.
Not with mortgages. Not today at least. And that’s what Stem Lending is changing.
How is mortgage shopping different?
Mortgage applications at banks and retail mortgage lenders can be time consuming.
It takes time to fill out the mortgage application. After all of that is done, will the lender be able to tell you what rates they can offer you for your mortgage?
Can you now search another mortgage provider that is selling the same product for a cheaper price and better service?
It’s not that simple with retail mortgage shopping. You now have to find a different bank or lender’s website, fill out a new application, and obtain a new loan estimate.
You often don’t even try a third one after that. It’s painfully time consuming already.
Mortgage lenders launch new products and offers all the time. The intelligence regarding, whether the fourth and the fifth lender you didn’t get to shop to had better rates, is what’s fundamentally missing in the market.
This is where mortgage brokerages, like Stem Lending differentiate.
You can complete a mortgage application and potentially review loan estimates from multiple leading wholesale mortgage lenders.
Lenders thrive on the consumer’s inertia
How so? Well, they know the process is tedious. Many consumers won’t even try a second lender, given how cumbersome the first one was.
Consumer Financial Protection Bureau (CFPB), the US government’s watchdog agency to protect consumers, says that very clearly on its website.
This CFPB research report shows that most of the borrowers don’t even shop for mortgage at a second lender and very few homebuyers shop beyond two mortgage lenders.
Since banks and lenders know that, they have no reason to show you the lowest rates. They are not worried that you’ll go to another lender because most don’t even try because of how cumbersome the process is.
Fannie Mae, a Government Sponsored Enterprise (GSE), did a similar study. While their study says that about two-thirds of the consumers get up to two quotes, we believe that getting more could help them find even better deals.
The biggest purchase of your life and you might be picking the worst deal!
Unfortunate, but true. Mortgage payment is often the biggest component of your monthly budget. And you get ripped off because of the nature of the transaction. Tedious and opaque.
As far as Stem Lending goes, we say, “Not on our watch!”. We’ll not let big banks take advantage of the consumer’s difficulty of shopping mortgage options.
So what is Stem Lending doing to change that?
Think of how you’d buy flight tickets two decades ago. You’d go through the same process. Ask a couple of friends for referrals on travel agents. Call a few of them to get price quotes and then go with the one offering the best deal.
Nowadays, travel agents are all but gone. The travel brokerage industry is now dominated by online shopping to booking firms like Priceline, Expedia, Travelocity, Kayak, etc.
You see fares for flights from all airline companies in one place. Real-time. All your options in front of you, to be filtered as desired based on your preferences. No one bugs you with phone calls any more. You choose what you like. Pay, and book. Done.
That is what we want the mortgage experience to be.
So what is Stem Lending’s mortgage shopping experience going to be like?
Fill out your mortgage application. And we show you the deals being offered to you by our top partner lenders. You get to pick the one you like the most.
We already have many of the leading wholesale mortgage lenders on the Stem Lending platform. We plan to grow our lender network to include every lender in the US and beyond. The more choices you get to conveniently sift through, the better a deal you can find without duplicated effort.
I just completed an application with another lender. Can I get a sense of what rates Stem’s partner lenders are offering?
Yes, you can provide a few inputs and we’ll be able to share with you real-time rates for that scenario from all our partner lenders. While we are happy to do that, a scenario is only as accurate as the inputs provided.
Everyone’s situation is different and unique. When you fill out the application, those same inputs become more accurate and so are the rates shown.
Our loyalty only lies with the consumer
Stem Lending makes commission for this transaction (primarily paid for by the lenders). But our loyalty lies with only one entity. And that is you, the consumer.
To ensure that, for a specific loan, we keep our commission the same across all our lenders. That way, we have no incentive to send your deal to anyone but the best of the lot.
We make sure you are the only partner we are loyal to. And as long as Stem Lending exists, that defines the fundamental principle on which it does.
Isn’t Stem Lending similar to what LendingTree, BankRate, NerdWallet, CreditKarma do?
That is a question we get very frequently from people that inquire about Stem Lending. The answer is no. Not by a long shot.
And how so?
Well, we differ on so many grounds:
- We help you shop wholesale lenders! Wholesale lenders don’t have brick and mortar stores and consequently, lower cost of mortgage origination vs. retail lenders. Retail lenders need to underwrite, process and maintain a large brick and mortar presence. Wholesale lenders aren’t consumer facing, they take applications only from mortgage brokers instead. Consumers often miss out on shopping their lower rates. Stem Lending helps bridge that gap.
- Broker vs. Lead Generator: Websites like LendingTree, BankRate, NerdWallet, CreditKarma are not mortgage brokers. Their engagement with customers concerning negotiating mortgage terms stops once they take your information and communicate the lead to mortgage brokers or larger banks. Think of the Amazon vs. ebay experience. People love Amazon because they control the warehouses, their supply chain, their deliveries etc. Enables them to maintain the high standards of customer experience. eBay, on the other hand, is a platform for individual sellers. Your purchase experience takes a hit when you don’t run into the same high quality of sellers consistently. Stem Lending wants to be the Amazon to LendingTree’s ebay model. Adding a great customer experience to the convenience, transparency and better rates is what sets us apart.
- Their loyalty is to….? The best lender? Not necessarily. They pass on your info to multiple brokers and lenders that pay them the most to get that lead. One lender can be far higher cost for the consumer, but gets the lead because they pay more to obtain the lead. Stem Lending, on the other hand, puts you back in the driving seat: transparently sharing lender offered rates with you and letting you decide which lender you’d like to proceed with.
- But they do take only one application? Yes, that is right. But then once the application is submitted, that’s where the similarity ends. You’ll likely start getting cold calls for the rest of the day and the next few days. That ruins the experience, right? Ours doesn’t. We are ready to show you rates at this point and you can choose who you like the most. Without having to call you. Being brokers, and not advertisers, your application is processed way before those cold calls end. But yes, if we discover better alternatives when reviewing your application, we’ll not hesitate to call you and discuss them with you to help you save even more.
If you don’t feel excited to hear about what we are doing or don’t believe us, there is only one way to get there. Get a quote and experience it yourself: stemlending.com/quote.