Do you want content like this delivered to your inbox?
Share
Share

Rocket Mortgage...Do They Really Compete with Cash Offers?

Jonathan "Jon" Bowen
Nov 10 5 minutes read

In the local real estate market Red Bank, Fair Haven, and Little Silver have averaged less than 20% of the single family home sales as cash, while Rumson has averaged over 30% of the single family homes sales as cash!  Check out the numbers below:

Fair Haven

There were a total of 106 residential transactions in Fair Haven this year as of 11.6.2020.

20

Cash Deals

2

FHA Loans

84

Conventional Loans

0

VA Loans

Little Silver

There were a total of 114 residential transactions in Little Silver this year as of 11.6.2020.

19

Cash Deals

1

FHA Loans

92

Conventional Loans

2

VA Loans

Red Bank

There were a total of 75 residential transactions in Red Bank this year as of 11.6.2020.

14

Cash Deals

7

FHA Loans

61

Conventional Loans

2

VA Loans

Rumson

There were a total of 149 residential transactions in Rumson this year as of 11.6.2020.

47

Cash Deals

1

FHA Loans

97

Conventional Loans

2

VA Loans

The COVID-19 pandemic has forced local residents to spend a lot more time at home then ever before.  This has definitely affected the local real estate market.  The average days on market has at least cut in half in most towns, and many new residents purchasing homes use all cash or a significant amount of cash for their purchase.  This factor in conjunction with bidding wars on almost every property have made housing inventory very low and made it very difficult to purchase a home, especially without using a realtor!

The “HOT” COVID-19 real estate market has also changed the marketing efforts of nationwide lenders like Rocket Mortgage by Quicken.  Check out their commercial below that claims their “Verified Approval” makes your mortgaged offer competitive with cash offers:

Rocket Mortgage did a great job with this commercial in my opinion, but do they really compete with a cash offer?  The answer is NO…..and YES.  Housing prices are typically increasing in a competitive market with bidding wars, and this is a problem for mortgaged purchases.  This is a problem because mortgaged purchases are loans from banks who use the most recent comparable sales to determine how much money they’re willing to lend you for each particular house.  When prices are going up fast like they are now,  the most recent sales the bank will use to value you your home will be less valuable compared to the home you’re purchasing.  What does that mean?! …. the bank sometimes won’t be willing to give you a loan for the full amount of your purchase.  When this happens you will be required to pay the difference between the low appraisal and your purchase price.  If you are not able to pay the difference, and the seller is not willing to reduce the price to the lower appraisal amount….then you can’t buy the house.


For the previous reason, Rocket Mortgage can’t always compete with cash offers.  However, the purchaser with a “Verified Approval” from Rocket Mortgage would be able to compete with cash offers if they had enough money to pay the difference of a low appraisal amount and is willing to waive the mortgage contingency in their contract  This is a much riskier purchase, but sometimes necessary in this very competitive market.


Also, Rocket Mortgage by Quicken is not the only company with a “Verified Approval” or similar loan product.  Essentially, Quicken Loans does an excellent job marketing a loan product that’s been around for years.  The “verified approval” is a step above a pre-approval letter in terms of buyer qualification because it indicates that the lender has collected all of the buyer’s documents and are ready to order an appraisal as soon as they have a contract for a house purchase.  An added benefit of this loan product is that the buyer is also able to close a little quicker than a buyer with only a pre-approval.


In my experience, Rocket Mortgage can be a good lender.  However, if you are not very tech savvy I would not recommend Rocket Mortgage because their online portal can be very frustrating to use.  


Quicken Loans, national lenders, and the “big banks” sometimes have the ability to offer unbeatable rates if you transfer your checking/savings/investment accounts to their bank.  This seems ideal, but you should keep two things in mind:

    1.  These “big banks” very rarely close on time and are typically much more stringent with the requirements for their loans.

    2.  The rate agreements sometimes have stipulations that the accounts have to be opened and/or used a certain amount of       time and volume in order to maintain the low mortgage rate.


The local lenders that I recommend are listed below with their contact information.  All of these lenders are very qualified, and make the loan process as easy as possible.


Sal Moschitta

Anthony Muscarella

Kris Davis

     

Selling Your Home? 

Get your home's value - our custom reports include accurate and up to date information.

Get Home Value
We use cookies to enhance your browsing experience and deliver our services. By continuing to visit this site, you agree to our use of cookies. More info