Personal financial management sites for years have helped consumers get smarter about saving money. Now they're helping them get smarter about going into debt.
On Thursday Intuit Inc.'s Mint.com began offering a tool that helps consumers understand what they are getting into when they decide to apply for a first mortgage or to refinance. Like its credit card recommendation engine, ultimately this new tool is a lead-generation service, but it is one that experts say meets people's expectations of a PFM provider.
"Understanding mortgages is complicated for consumers," said Craig Focardi, a senior research director for consumer lending at TowerGroup.
The subprime crisis and increased regulatory scrutiny have forced banks to be more transparent about mortgage lending, but consumers would still benefit from "an independent financial adviser like Mint," Focardi said.
Brad Strothkamp, vice president and principal analyst at Forrester Research Inc. in Cambridge, Mass., said the refinance tool goes beyond what consumers typically expect from banks.
"The power of this is for the existing borrower," Strothkamp said. "It would not be in the interest of banks to say you ought to think of refinancing."
Vince Maniago, senior product manager at Intuit Personal Finance Group, said that half of Mint's users already own a home. A goal in offering the mortgage calculator was to help consumers get a clear picture of their debts, as well as their assets, he said.
Ken Alverson, a partner in charge of the consumer lending practice at the consulting firm Novantas LLC, said that in its early days PFM focused on "wallet management." Now, he said, it is migrating to "the liability side for consumers, and that is much more important as you go down the segment to the mass market."
Alverson said that roughly 65% of consumers own a home, and that the U.S. consumers typically have more debt than savings.
While PFM has conventionally been more about saving and monitoring spending, some providers have been placing a greater emphasis on the concept of entering debt, such as by adding credit cards or by purchasing a home.
PNC Financial Services Group Inc.'s Virtual Wallet allows consumers to apply for credit cards from PNC and then monitor their spending on the account. And Bank of America Corp. includes in its My Portfolio PFM product a real estate section that monitors consumers' home values by pulling in data from Zillow Inc.'s Zillow.com. It also shows equity in their homes and compares prices against comparable homes in a consumer's area.
Mint offers the mortgage product through a partnership with Credit Sesame Inc., a Sunnyvale, Calif., company that analyzes consumer debts, including credit card, mortgage and other bank loans, then pairs consumers with competing offers. It typically sells its service to banks as a white-label product but has its own consumer site for mortgages, said Adrian Nazari, chief executive and founder of Credit Sesame.
"This is a distribution deal for us, and Mint can use our product to design unique aspects [for mortgage holders], like time-horizons, or lower payments, and our technology lets the user sort through thousands of options, with details about savings and their payments," Nazari said.
The mortgage calculator is also a good money-making opportunity for Mint, experts said. Mint might make three to five times more revenue on mortgages than for its referrals on credit cards and checking accounts, experts said.
"Mint is trying to refine its customer base and get fee-based revenue based on mortgage referrals," said Christine Pratt, a senior analyst for lending at Aite Group in Boston. She added that the information Mint captures before sending off the request about mortgages is also valuable for cross-selling and other purposes.
"We are trying to simplify the process, and if you have already given us information, we will not ask for this again" with the mortgage calculator, Maniago said. "We attempt to use the information we have from account aggregation."
Finally, analysts said that it will be critical for Mint to ensure its mortgage offers are real and current. "Sometimes the offers are limited and very finely crafted about who would qualify, and when you get down to the nitty-gritty, it's a different picture," said Mark Schwanhausser, a senior analyst at Javelin Strategy and Research.
Mint says its mortgages offers are live and current for at least one day.
