An Economic Analysis of the Quicken Loans Mortgage App

The NY Times offers an economic critique of the new Quicken Loans “Rocket Mortgage” app:

The company’s solution — especially as it is portrayed in the commercial — does have problems. The commercial portrays taking out a home loan using the app as being almost a casual thing to do.

Reducing paperwork and bureaucratic hurdles to a mortgage are desirable in isolation; the homebuying process is laden with hidden fees and conflicts of interest that can add thousands of dollars to the price of a home purchase.

But the Quicken Loans ad goes a step further, with the narrator asking what would happen if the Internet “did for mortgages what the Internet did for buying music, plane tickets and shoes,” then showing a woman getting a home mortgage with the press of a button on her phone.

If taken too literally, this could get people in trouble. A home mortgage is the biggest financial obligation most people will take on. If you buy the wrong music, plane ticket or shoes, it’s probably not a crippling financial burden, where the wrong mortgage can be.

 

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