The Yahoo view: A mash-up of a lender and a lender marketplace, Zillow Home Loans may be best for those looking to shop multiple mortgage providers in one place.
One of the biggest names in real estate, particularly home search, is also a rapidly growing mortgage lender. Zillow Home Loans represents the kind of “integrated” provider that’s becoming more common in today’s market. This kind of mortgage loan firm connects consumers to not only lending services, but also to real estate agents, attorneys, closing services, and even insurance.
Zillow obviously helps you find a home to buy — or rent — and connects you to real estate agents, but now, it’s becoming a bigger player in home financing.
Yahoo Finance deployed a real-life user perspective on services offered and a critical analysis of mortgage rates and loan costs to examine how Zillow Home Loans compares to competing mortgage lenders.
Read more: Should you rent or buy? How to decide.
Key benefits
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A “BuyAbility” tool gauges your home affordability in real time based on your income, down payment, regularly updated mortgage rates, and latest credit score. Eventually, it will show homes that mirror your purchasing power.
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Shopping for a loan while browsing homes makes for a convenient experience.
Need to know
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Zillow Home Loans has limited loan offerings.
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It’s hard to know whether a prequalification or preapproval application will generate a response from Zillow Home Loans or from a third-party provider in the Zillow Group Marketplace. Don’t be surprised if you get directed to a mortgage lender other than Zillow.
Visit Zillow Home Loans’ website to get started.
Zillow Home Loans offers the following types of home loans:
Zillow Home Loans does not offer the following types of home loans:
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USDA loans
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Interest-only mortgages
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Lot loans
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Construction loans
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Guest house loans
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Nonqualified mortgages
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Energy efficient mortgages
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Renovation loans
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1% down payment mortgages
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Bridge loans
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Manufactured home mortgages
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Piggyback loans
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ITIN mortgages
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Medical professional loans
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HELOCs
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Home equity loans
Dig deeper: How a buydown loan helps you buy down your mortgage interest rate
Navigating through the Zillow Learning Center will eventually take you to a first-time home buyer page with over 100 articles, some with embedded videos, which we appreciate.
A down payment assistance tool is particularly useful. You answer a series of seven questions, and it tells you what assistance programs may be available where you live. This is the first time we’ve seen such a resource. Impressive.
Read more: The best mortgage lenders for first-time home buyers
Zillow does not offer home equity products, even though you may see them on a sub-menu as a loan option.
For products not provided by Zillow Home Loans, the mortgage loan page will steer you to the Zillow marketplace, where many third-party lenders may receive your contact information and vie for your business.
Dig deeper: The differences between HELOCs and home equity loans
The mortgage rates page at Zillow Home Loans shows the rates for available loan products. It even displays the one-week change for each rate.
Conforming loan rates are available for 30-, 20-, 15-, and 10-year fixed-rate loans. ARMs are available in 3-, 5-, and 7-year terms. Government loans show 30-year and 15-year fixed terms for FHA and VA mortgages. Jumbo loans show five options in fixed and adjustable rates.
To see how the rates are determined, click on “See legal disclosures” at the top right of each section. That’s where you’ll learn that these aren’t Zillow Home Loan rates but averages from lenders in the Zillow marketplace. Conventional loans assume a 20% down payment and a 740 credit score.
Since there are so many lenders in the Zillow lending universe and because you don’t know which one you’ll end up with, it’s safe to say these rates are simply broad estimates.
Read more: How to get the lowest mortgage rates
Yahoo Finance uses 2023 Home Mortgage Disclosure Act (HMDA) data comprised of 10 million home loan applications to score mortgage lenders on issued mortgage rates and total loan costs. We score each lender on a scale of 1 (lowest) to 5 (highest).
For example, regarding mortgage rates, a lender with a lower score charged a higher-than-median mortgage interest rate for loans issued in 2023. A higher score would indicate that a lender granted lower-than-median home loan interest rates to borrowers in 2023.
With total home loan costs, a lower score would indicate that a lender charged higher-than-median total home loan costs in 2023. A high rating would mean that a mortgage lender offered lower-than-median all-in home loan costs in 2023.
What this means: Zillow Home Loans offered a higher-than-median mortgage rate of 6.75% but a near-median total loan cost of $6,708 to borrowers in 2023.
Zillow Home Loans gives you plenty of opportunities to jump into a home loan prequalification application. But this is where things get fuzzy. Depending on where you enter the workflow, you may see one of three different screens — and move through a different sales channel.
In the preapproval process, one screen begins by asking for your ZIP code. It says that your preapproval application will always be submitted to Zillow Home Loans, but perhaps to other lenders as well.
Another identical page except for one word offers to prequalify you for a mortgage loan.
A third entry point says you can prequalify in as little as three minutes. It, too, says you will be connected to “loan officers at Zillow Home Loans or from Zillow’s network of lenders.”
Whichever you choose — a quick but nonbinding prequalification or the more formal preapproval — it looks like you’ll be funneled to Zillow Home Loans and other lenders.
Dig deeper: What is mortgage prequalification?
We found half a dozen mortgage calculators on Zillow Home Loans:
Later, while looking to return to the calculator list, we got lost. It seems that once you get into a certain section of Zillow Home Loans, the footer menu changes, and the list of calculators disappears. We couldn’t even find a link to the calculators in the Learning Center, which was frustrating.
We did uncover — but didn’t test — a relatively new feature. With the Zillow mobile app and BuyAbility, a home affordability calculation is updated with real-time interest rates, changes to your credit score, income, and down payment.
As you might expect, Zillow Home Loans also has an ample supply of timely, engaging, and informative articles on the mortgage loan process.
Learn more: How much house can I afford? Use our home affordability calculator.
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We applaud the learning resources on Zillow Home Loans, including the down payment assistance program finder. Five stars for online features.
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Mortgage rates include recent trends, which might be helpful.
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Zillow Home Loans is a little pricey with their interest rates, according to the latest HMDA data.
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Loan options seem more plentiful than they really are because some mortgages are delivered via the lender marketplace.
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Zillow is not authorized to issue home loans in New York.
Read more: What determines mortgage rates? It’s complicated.
Rocket rose to fame as an online mortgage lender, and Zillow became famous for its home search capabilities. As services expand, Rocket shows homes, and Zillow offers loans. According to Yahoo Finance’s latest analysis, Rocket has lower interest rates, and Zillow Home Loans have slightly lower loan costs.
Rocket has more loan choices. Zillow Home Loans has better online learning resources. These tightly matched competitors are both worth a look.
Neither Zillow nor Better offers down payment assistance; however, Better has a wider range of home loans than Zillow, including home equity loans and HELOCs.
While Zillow Home Loans could gain even more traction with its combination of loans and homes, Better has a growing digital experience by tying in its mortgage offerings with insurance, real estate, and settlement services.
According to Zillow’s website, a credit score of 620 is the minimum required for “most loan types.”
ZHL leans on its mortgage marketplace to provide this answer. It says that with all the paperwork submitted, “most lenders can process mortgage preapprovals in less than a day.” That may be optimistic.
Zillow does not require a hard credit check to prequalify for a mortgage loan. Prequalification is basically equivalent to saying, “Maybe we’ll make the loan.” But yes, there is a hard pull of your credit for a preapproval. That’s saying, “Yes, we’ll probably make you a loan.”
Zillow Home Loans says it uses bank-level security encryption and will never resell your information.
Methodology:
Yahoo Finance reviews and scores mortgage lenders with quintile scoring in five primary categories: 1) Interest rates. Using 2023 Home Mortgage Disclosure Act data comprised of 10 million home loan applications, we score mortgage lenders on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and lenders are rated based on total loan costs compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We score lenders based on whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.
Review of Nationwide Multistate Licensing System (NMLS) data on regulatory actions can trigger a penalty to the score of any lender with a consumer mortgage-related administrative or enforcement action within the past five years.
Advertisers or sponsorships do not influence ratings.
Editorial disclosure for mortgages:
The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender’s website for the most current information. This site doesn’t include all currently available offers.
This article was edited by Laura Grace Tarpley.
