Recently, my wife and I refinanced our house. While this will be a future post, I would like to provide some context as to why we made this decision. The first reason was that I purchased the house prior to getting married. To consolidate our major financial assets, it was important that both my wife and I were on the loan together. The second, and more important reason, was by unlocking some of the equity in our house, we are able to advance our rental property purchase plan significantly. Since rental properties will be an important component of our retirement, accelerating this timeline and building out our portfolio now will make this strategy much more lucrative in retirement.
At the end of the day, there are many reasons a refinance can make sense. There are also times it may seem enticing but isn’t the best financial decision. In our case, we felt this was a great way to kill two birds with one stone and set us up for broad, long-term future success.
One of the biggest decisions you must make when buying a home or refinancing an existing mortgage is what lender to use. Taking a look at 2017 data, chances are you’ll probably be looking at either Quicken Loans or Wells Fargo. Wells Fargo is the largest mortgage originator in the country ($93 Billion in 2017) quickly followed by Quicken ($81.3 Billion in 2017). The next closest lender is JP Morgan Chase at ($53.2 Billion in 2017). I’ve always been a Wells Fargo customer myself, but this go around I wanted to find an experience that was quick and wouldn’t require much face-to-face interaction. This is where Rocket Mortgage by Quicken Loans comes in. I’d like to share my experience with you around three of the biggest areas regarding the process: initial discovery and rates, speed and service, and the closing process.
Initial Discovery and Rates
Before I began putting pen to paper, I researched the rates of a variety of different companies. When I had my first engagement with Quicken, I wasn’t incredibly impressed with the rates they offered. I had written them off until I received a follow up call from their customer success team. I ended up having a good conversation with one of their associates and was able to secure a lower rate and some additional assistance with closing costs. This offer ended up being good enough for me to want to move forward with them. I had read several reviews and was confident it would be a good experience but getting the rate and other conditions in a good place was important because a mortgage is a long-term investment, and some short-term pain is worth a lower rate.
I think this detail is important for others to understand: never accept an offer at face value. If I had proceeded with their original offer, it may have cost me tens of thousands of dollars over the life of the loan. By doing my research and knowing what I wanted, I was able to reasonably assess the value of an offer. Where I give Quicken a lot of credit in this instance is being proactive and negotiating in my best interest. It would have been easy for them to ignore me, or they could have made the process more cumbersome. Instead, they initiated the conversation and came to the table willing to compete for my business. I like that in a company.
Speed and Service
This is one of the areas that I had high expectations around. J.D. Power has ranked Quicken Loans as #1 in customer satisfaction for nine straight years. This is an impressive accomplishment, and I agree with it based on my experience. An important point is that this is not the most important criteria when choosing a lender. I am willing to suffer through a worse experience if it means I can get a significantly better rate. With that being said, if the rates are equal, then of course I want to have a quality customer experience.
My favorite part of the whole process stemmed from the online process they have set up with Rocket Mortgage. There is very limited engagement needed with the folks from their company, but the minute you have a question you can ping them via the online app and they get back to you quickly. This is different than prior experiences I’ve had. There were also a couple documents I couldn’t immediately find, and all I had to do was sign a form with them and they were able to procure on my behalf. Life gets busy, and they really seem to make everything as effortless as possible.
The whole process from start to finish took place within a month. While I have never refinanced a house before, this was quicker than prior closings I’ve had and generally aligned with my expectations for how long the process should take.
The Closing Process
This was one of the best parts of the entire experience. I was dreading the idea of having to coordinate with my wife a time on a workday that worked for both of us to leave our jobs in the middle of the day. Instead, Quicken allowed us to schedule the closing at our house in the evening. Not only was this convenient for our schedules, but it made the overall process much less time intensive. Instead of disrupting our schedule to go sign 20-30 different documents, someone came to our house and was in and out in under 20 minutes. The funds were deployed electronically to our account in a matter of days, and the process was complete.
Anytime you’re signing up for a mortgage, there are a lot of things you must evaluate. While rates and loan terms are very important, it’s always great to have a good experience as well. Quicken met both criteria for me, and I’d advise anyone to put them in your consideration set if you’re looking to take on a mortgage.
It’s very interesting to hear Patrick’s perspective on his experience with Quicken Loans. I’ve never used them for any of our mortgages, but I have heard good things. Hearing Patrick’s detailed experience gives me an inside perspective without having to go through the process myself – much like when I shared my experience with using Marcus by Goldman Sachs.
Shopping rates is the most important step in securing a mortgage – regardless of whether you’re buying a house or refinancing your current home. Consider the following example:
Let’s say you are buying a $275,000 house and can afford to put 20% down. At a 4.125% interest rate, you’ll pay $164,000 in interest over the life of the 30 year fixed loan. When you contrast that with a loan that is only 1/8th of a point higher – or 4.250% – you would end up paying $170,000 in interest. That difference of $6,000 is the only difference in making a second phone call to compare rates.
Patrick does share Quicken Loan’s track record of high customer service scores. Customer service is important. I’m not going to argue that it isn’t – but generally speaking, you can put up with less-than-optimal service during the 2 weeks before closing to save thousands over the next 30 years.
That may not seem like the right decision when you’re in the midst of the stress associated with buying a house or refinancing your home. But taking the same example above – that 1/8th of a point would equate to $20 per month off your mortgage bill.
What if you were to find the lower rate, deal with less-than-ideal service, and apply that $20 per month towards additional payments towards principal? You would end up paying only $157,000 in interest. By finding the lowest rate, applying the difference (assuming you can afford it) towards the principal, you would save $7,000 vs the base payments.
While I am glad Patrick had a great experience with Quicken, and it sounds like a platform I would likely explore in the future – my primary mortgage shopping filter is always on the rate – which, for Patrick, it appears Quicken checked both boxes!