Dive Brief:
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LendingTree is entering the home-valuation game with a tool to help people buy and sell homes and refinance their mortgages, according to HousingWire. The feature will be part of the online loan exchange's existing financial platform.
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The tool will estimate the extent to which a user can finance — and refinance — a given home purchase by gathering and assessing third-party data on their financial accounts and existing mortgages and loans.
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Users can also get an estimate of existing and potential untapped equity that can be used for home-improvement projects, debt consolidation and other financial retooling.
Dive Insight:
LendingTree's new tool comes as similar platforms, such as Zillow's Zestimate home valuation feature, face pushback from critics who argue that algorithms alone don’t paint an accurate portrait of a home's value. One Illinois homeowner recently sued Zillow, claiming the Zestimate appraisal was inaccurate and thus damaged her chances of receiving a market-value price for the home. That homeowner, a real estate lawyer, dropped her own case shortly thereafter and filed a new one against Zillow with additional homebuilder plaintiffs and is seeking class-action status.
Rather than offer an approximate home value, LendingTree aims to give a fuller picture of a homeowners’ financials, which is something that could resonate with the growing share of millennials using technology for the home search and purchase processes.
According to Ellie Mae’s 2017 Borrower Insights Survey, 30% of millennials reported starting the mortgage application process online before finishing it in-person with their lending agent. Lenders are starting to take notice, with many beginning the mortgage application process digitally and increasing efforts to address clients face-to-face.
While millennials face a number of barriers to homeownership — including student loan debt and high home prices that make saving for a down payment a challenge — the group accounted for 45% of all purchase loans in January and now represent the largest group of homebuyers in the U.S. market, according to Ellie Mae. More still, millennial borrowers are closing loans at faster rates, taking an average of 42 days to close in April as compared to 43 days in March.
More comprehensive online tools will likely crop up as millennials and the next generation of buyers begin to express a greater desire to understand the costs associated with homeownership. Zillow has already acknowledged the trend with its launch of RealEstate.com, a home-listing website geared toward younger, first-time buyers that helps to educate them about expenses beyond the list price by looking at the costs from a monthly perspective.