E196: The One Day Mortgage!

Imagine a website where you could find out how much mortgage you can afford with just ONE CLICK. Sounds magical, right? Well, unfortunately, it is too good to be true. There’s no website that can tell you - honestly - how much home you can afford with just one easy step. David explains why you should be on your guard with these kinds of institutions and helps you understand the mortgage process better so you can protect yourself.

Here are some power takeaways from today’s conversation:

• The history of the “one-day mortgage”
• What happened to Better.com
• Why you shouldn’t trust these agencies at face value
• How a mortgage works

Episode Highlights:

[02:39] The History of the One-day Mortgage

A year or so ago, someone invented something called “the one-day mortgage” and claimed that it would be “revolutionary” for first-time home buyers. Buyers could get approved for a mortgage from one click on their mobile device from a digital lender called Better.com. Sounds great, right? But then some sketchy stuff surfaced about this one-day mortgage process. First, not many people who actually applied were then qualified, even at the exorbitant interest rates they were offering at the time. Then, they were purchased by another company who hired 900 employees to help move the company towards a dazzling success… right before they fired every single one of them. So, do we believe them when they say they have the key to first-time home-buying success? Um, NO.

[09:07] Surprise, Surprise: It Wasn’t About You

Their whole business model was centered around getting easy money. That’s why mortgages for first-time home buyers aren’t even what they specialize in - it’s refinancing because that’s where the money is. Why is all this important? Because David wants to open the doors about what really goes on in these institutions so you know how to be better prepared. They want you to buy into their craziness because they want your MONEY. Not because they care about you. And you, How-to-Buy-a-Homie, are not even their first priority. You’re their last-ditch effort to save their bottom line. So whether it’s Better.com, RocketMortgage, or any other digital lender, BE WARY.

[17:49] How Does a Mortgage Work?

First of all, “one-day mortgage” is a lie right off the bat. Why? Here’s the deal: you need someone who is going to really help you through the entire process because mortgages do not happen overnight. You can find out how much you’re approved for on these digital lending sites, they will certainly tell you how much you can afford… right in that very moment. Instead, unicorn lenders are unicorns because they are helping you simultaneously understand your situation, understand it well enough to improve it, and support you the whole way. Trust David - it makes a difference. 

Resources Mentioned

Inside the Human Cost of Better.com’s Brutal Layoffs

Better.com Lays Off Real Estate Team and Shutters Business Unit