Online Lender Reviews: What 300+ Reviews Reveal About Common Complaints

As a local mortgage broker, I recently conducted a deep dive into over 300 customer reviews from one of the biggest online mortgage lenders. What I found was a pattern of issues that homebuyers and homeowners frequently encounter, many of which could have been avoided with the right guidance.

Online lenders often market themselves as offering fast approvals, low rates, and convenience, but many consumers experience unexpected roadblocks, misleading terms, and poor customer service.

Below, I outline the top eight consumer complaints, explain when they typically occur in the loan process, and provide clear strategies to help you avoid these pitfalls before they happen.

1. Poor Communication & Customer Service

📌 When This Happens: Throughout the Loan Process—Especially During Pre-Approval & Underwriting

The Complaint:
Many borrowers found it difficult to reach their loan officer, experienced slow response times, or felt abandoned once the loan was in process. Some had urgent questions about their loan status that went unanswered, leading to frustration and uncertainty.

How to Avoid This:

• Work with a local mortgage broker who provides direct, reliable communication instead of being transferred between multiple representatives.
• Ask the lender if you will have one dedicated contact person or if you will be routed through a general customer service line.
• Choose a lender known for consistent loan updates and responsiveness.

When to Address This Issue:
Ask about communication policies during your very first call with the lender. If they don’t guarantee a single point of contact or struggle to answer your questions promptly, consider other options.

2. Hidden Fees & Unexpected Costs

📌 When This Happens: Loan Estimate & Closing Disclosure Stage

The Complaint:
Many borrowers were surprised by extra fees, incorrect closing costs, or undisclosed charges that only became clear late in the process.

How to Avoid This:

• Request a detailed Loan Estimate upfront and review the breakdown of all costs.
• Get a written confirmation of all fees before moving forward.
• Watch out for lenders advertising “no-cost loans”, as the costs may be built into the loan itself.

When to Address This Issue:
As soon as you receive your Loan Estimate, compare it to your initial quote. If the fees seem higher or different than expected, ask for an explanation before proceeding. Ensure that the Closing Disclosure you receive just before closing matches what was initially disclosed.

3. Loan Processing Delays

📌 When This Happens: Underwriting & Pre-Closing

The Complaint:
Borrowers often encountered last-minute requests for documents, underwriting delays, or processing inefficiencies that resulted in missed closing dates and added stress.

How to Avoid This:

• Work with a lender that provides a clear closing timeline and sticks to it.
• Gather all required documents ahead of time (pay stubs, tax returns, bank statements) to avoid last-minute scrambling.
• Ask your lender for a detailed list of required documents upfront to minimize the risk of surprises.

When to Address This Issue:
During your first conversation with the lender, ask: “What is your average closing time, and how do you prevent delays?” If they cannot provide a clear answer, proceed with caution.

4. Misleading Loan Terms

📌 When This Happens: Initial Quote & Rate Lock Period

The Complaint:
Some borrowers were promised low rates, flexible terms, or cash-out refinancing options, only to have the loan terms change unexpectedly later in the process.

How to Avoid This:

• Get all rate quotes and loan terms in writing.
• Read the fine print carefully, especially regarding rate locks and adjustable-rate mortgage terms.
• Be skeptical of lenders who aggressively push for quick rate locks without explaining the details.

When to Address This Issue:
Before agreeing to a rate, ask: “Can you confirm this rate in writing, and will it remain locked until closing?” If they avoid answering or don’t provide written confirmation, that’s a red flag.

5. Poor Handling of Appraisals

📌 When This Happens: Home Appraisal Stage

The Complaint:
Some borrowers received low or inaccurate appraisals, often from inexperienced appraisers unfamiliar with the local market. These errors negatively impacted their ability to secure the loan amount they needed.

How to Avoid This:

• Request a local appraiser who understands property values in your area.
• Review recent comparable home sales beforehand to ensure a fair appraisal.
• If an appraisal seems unfair, challenge it by providing additional data.

When to Address This Issue:
Before the appraisal is scheduled, ask your lender how they select appraisers. Some online lenders use randomly assigned appraisers who may not be familiar with your neighborhood.

6. Pushy Sales Tactics

📌 When This Happens: Initial Loan Inquiry

The Complaint:
Some borrowers felt pressured to commit quickly or received excessive follow-up calls from aggressive loan officers.

How to Avoid This:

• Compare multiple lenders before making a decision.
• Be cautious if a lender pushes you to lock in a rate or move forward before you’re ready.
• If you receive persistent sales calls after declining an offer, consider blocking the lender.

When to Address This Issue:
During your first interaction, if the lender seems more interested in selling you on a deal than in answering your questions, that’s a sign to look elsewhere.

7. Mishandling of Escrow & Insurance Payments

📌 When This Happens: After Loan Closing

The Complaint:
Some borrowers experienced errors in escrow payments, where property taxes and insurance payments were either sent to the wrong place or not paid at all, leading to policy cancellations or late fees.

How to Avoid This:

• Regularly check your escrow account statements to ensure payments are being made.
• Confirm directly with your insurance provider and tax authority that your lender has made the payments.

When to Address This Issue:
Before closing, ask your lender: “How do you handle escrow payments, and how can I verify that they are being made correctly?”

Final Thoughts: Why Choosing the Right Lender Matters

Online lenders often promise a simple, fast mortgage experience, but real-world customer reviews tell a different story. From poor communication to hidden fees and closing delays, these challenges can turn a home loan process into a frustrating ordeal.

By working with a local mortgage broker, you gain an advocate who ensures transparent communication, fair pricing, and a smooth experience from start to finish.

If you’re considering buying a home or refinancing, let’s connect. I’ll help you avoid these common mistakes and make the mortgage process as seamless as possible.