For some consumers, meeting with a mortgage lender face-to-face provides a certain peace of mind. But the popularity of online mortgage companies like Quicken Loans, the largest of the internet-based firms, shows that plenty of folks are perfectly comfortable applying for a loan outside of an office. If you’re shopping for a new mortgage or trying to refinance via the web, it’s important to realize that not all loan originators have the same approach. Whereas sites like Lending Tree and Zillow essentially act as brokers, sending your basic information to multiple mortgage providers, Quicken Loans is a direct lender.  That has its pros and cons. Using Quicken Loans means you won’t receive an onslaught of emails from lenders trying to get your business. Your personal information gets into fewer hands, a big draw for privacy-minded customers. On the other hand, it’s hard to know whether you’re getting the best rate if you don’t have several bids coming your way.

Moreover, if you approach more than one direct lender to comparison shop, you could end up with more paperwork—and more queries to your credit report. One advantage Quicken Loans provides is choice. The company, which dates back to 1985, offers conventional mortgages—it offers both fixed-rate and adjustable-rate varieties—as well as specialized products, such as VA and FHA mortgages. Adjustable-rate mortgages (ARMs) can save borrowers a lot of money in interest rates over the short to medium term. But if you are holding one when it’s time for the interest rate to reset, you may face a much higher monthly mortgage bill. That’s fine if you can afford it, but if you are like the vast majority of Americans, an increase in the amount you pay each month is likely to be hard to swallow.

What is an Adjustable Rate Mortgage?
Consider this: The resetting of adjustable-rate mortgages during the financial crisis explains why, in part, so many people were forced into foreclosure or had to sell their homes in short sales. After the housing meltdown, many financial planners placed adjustable-rate mortgages in the risky category. While the ARM has gotten a bum rap, it’s not a bad mortgage product, provided borrowers know what they are getting into and what happens when an adjustable-rate mortgage resets.

An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate applied on the outstanding balance varies throughout the life of the loan.
When rates go up, ARM borrowers can expect to pay higher monthly mortgage payments.
The ARM interest rate resets on a pre-set schedule, often yearly or semi-annually.
With adjustable-rate mortgage caps, there are limits set on how much the interest rates and/or payments can rise per year or over the lifetime of the loan.

Streamlined Loan Process
In some respects, the process of obtaining a mortgage through Quicken Loans is similar to that of traditional lenders. You begin by calling or chatting with a Quicken Loans mortgage banker. The company uses your credit score and basic financial information to determine the loan options and rates for which you qualify. Before you close the loan, the company has to underwrite the mortgage—that is, verify that your income and employment information is correct and make sure you have adequate homeowner’s insurance. It also has to order a home appraisal from a third party.

These steps cost money, which is why Quicken requires that borrowers make a “good faith deposit” of between $400 and $750. The good news is that the company deducts the deposit from your other closing costs, so in the end, you may not be paying more than you would with other lenders. Rocket Mortgage, one of Quicken’s loan products, offers a different experience. With Rocket, you start the process online and provide information about where you work and do your banking. For many consumers, the company is able to pull pay stubs and bank statements directly from their financial institutions, eliminating the need to scrounge up those documents and send them over. As a result, it’s simpler—and significantly faster. Some of the company’s first ads in 2016 touted its ability to provide approvals in as little as eight minutes. Rocket Mortgage seems to back off those claims in more recent advertising campaigns, but it’s still considerably faster than the traditional loan process.

A Strong Track Record
Quicken markets itself as a more convenient alternative to traditional lenders. Rocket Mortgage is certainly a big part of that. You not only get faster approval, but also access to an online portal that lets you get in touch with a lending expert, check the status of your loan, and view information about the closing. Do homeowners have to sacrifice service when working with a banker in another part of the country? According to most industry sources, the answer is decidedly “no.” In 2018, J.D. Power, which ranks mortgage originators based on customer satisfaction, awarded Quicken Loans its top spot for the ninth consecutive year. The company also receives 4.5 stars out of 5 on real estate site Zillow.

Interest Rate Changes with an ARM
In order to get a grasp on what is in store for you with an adjustable-rate mortgage, you first have to understand how the product works. With an ARM, borrowers lock in an interest rate, usually a low one, for a set period of time. When that time frame ends, the mortgage interest rate resets to whatever the prevailing interest rate is. The initial period in which the rate doesn’t change ranges anywhere from six months to ten years, according to the Federal Home Loan Mortgage Corporation, or Freddie Mac. For some ARM products, the interest rate a borrower pays (and the amount of the monthly payment) can increase substantially later on in the loan. Because of the initial low interest rate, it can be attractive to borrowers, particularly those who don’t plan to stay in their homes for too long or who are knowledgeable enough to refinance if interest rates go up. In recent years, with interest rates hovering at record lows, borrowers who had an adjustable-rate mortgage reset or adjusted didn’t see too big a jump in their monthly payments. But that could change depending on how much and how quickly the Federal Reserve raises its benchmark rate.