We were brokered a Rocket Mortgage Loan
Hey BP!
Maybe I'm reading into this too much, but I'm feeling somewhat uneasy after finding out that our conventional mortgage will be serviced by Rocket Mortgage (Quicken Loans).
Here's the backstory: my wife and I are under contract on a single family home and I put a lot of effort into finding the best mortgage for us. I admit that I fell into a bit of an interest rate chase (which I know we're not supposed to do, David). However, in my defense, I hooked up with an old acquaintance who happens to be a loan officer and he was consistently offering a point below the competition with no discount points. During our search, I kept in touch with him at the top of each week to confirm that we were in a similar spot for rates and that he was still our best option.
Anyway, we get into escrow and our initial loan disclosures are different than what we were expecting. I totally get that rates are hiking right now (honestly that's a big reason why we're on the hunt in the first place), but the difference in the interest rate was over half a point and we are now being charged 5/8 point in discount fees on top of it. Ultimately, it's all good because the discount will pay itself off in two years and it's still a better rate than we expected elsewhere.
It's been such a whirlwind because we've got a short contingency period and I didn't realize until last night that there was no one listed in the loan servicer section of our disclosures. I thought that was really odd so I reached out to my loan officer and he said that we'll be serviced by Rocket Mortgage. Am I correct in being a little uneasy about this? My gut is telling me that it's weird that I went through all this effort to find a middleman (broker) to secure me the best loan and what he got me was something I could lock in via a google search. Does Quicken loans have special deals for brokers that actually make this worth it?
Keep in mind that the jungle drums of escrow are in the back of my head and, despite my best efforts, emotion is creeping into every decision. I can totally accept that I'm overreacting in this case, but we've already been put on edge by the change in the rate and the discount points so I figured it was best to get some answers.
Thanks!
Hi @Bryce Platz, yes, Rocket being the servicer is normal. However, the charging discount points and it increasing by half a point is not. If you are checking in every week, the rate should not have jumped up half a point with discount points. Especially since rates have improved since last week. The loan officer might not have been completely truthful with you upfront.
There is a huge difference between going with Rocket's retail division and a broker when it comes to pricing. Pricing is determined by 11 factors. 9 of which are determined by you (loan type, occupancy, credit score, etc.) and 2 that are outside of your control (lender/broker profit margin and market conditions). Rocket's retail division is on the higher end of the scale because they have super bowl commercials and basketball stadiums to fund. Most brokers charge between 2.25 and 2.75%, which makes them comparable. 1.75% is really the lowest you will get. I have not seen lower except for some internet lenders during the refinance boom.
In some cases, Rocket is better than brokers. In others, brokers blow Rocket out of the water. It really all depends on who you work with.
Hope this helps! Let me know if you have any questions.
Thanks Andrew! This was incredibly helpful and totally makes sense. I'm with you on the rate hike and discount points thing, but we're probably still in a good spot compared to what we could get elsewhere.
Thanks again for the help!
Hard to tell from your post if they're brokering to Rocket Mortgage or funding the loan themselves and transferring servicing to Rocket afterwards. Either way though it shouldn't really matter to you as long as you're happy with the rate and costs. Rocket/Quicken is a good servicer.
And like Andrew said, you would definitely not have gotten the same deal by going to Rocket/Quicken direct. Their retail pricing is not competitive. Their wholesale pricing via brokers can be.
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@Bryce Platz Mortgage brokers work with several lenders that offer wholesale pricing. The lenders are motivated to give better rates, ltvs, terms, and incentives to win over the broker's business. Additionally, the whole loan process is also a motivation to choose one lender over another on the broker side. Some lenders are very hard to work with, and we take that annoyance away from you. When you think about the commission, think about it this way "hey if I don't nickel and dime my broker, he's going to go above and beyond to find me a great loan that fits my needs." You could very well go to a retail bank and do it yourself but you are trusting a broker that is motivated and has the resources to find you a great deal.
I can't speak for all mortgage brokers because there are some that won't give you the full story but that's why there's many to choose from!
@Bryce Platz yes if you went thru a true broker your rate should be lower than what rocket mortgage would offer you. Rocket does a great job on the servicing side.
@Bryce Platz...you should have nothing to worry about. On the conventional side, Rocket is one of my go-to's and they really have taken care of all my clients, not only on the transaction side, but nothing bad to say on the servicing end of things either. Full disclosure, I'm a mortgage broker in CA.
At the end of the day, you are the borrower and it's your money. If you don't like the lender the broker has chosen, ask your broker to change to a different one. Quicken is similar to UWM in terms of their rates are not the best, but their lending process and servicing is outstanding. That's why many brokers love using them.
Quicken and UWM are often 0.250%+ higher than other lenders who are more than capable of closing on time and servicing the loan. They just may not do the processing as efficiently.
I've had clients of mine specifically ask to not be paired with certain lenders. It's fine and I accommodate and still get them similar terms and close on time. No biggie at all.
One thing I will point out about Quicken/Rocket... after about 6 months, their Retail side will bug you to refinance. Borderline harass you about it. Be aware.
Cheers!
Quicken changed name to Rocket (same company). Your broker is sending the loan through Rocket Pro their wholesale division. Rocket may sell off the servicing. There is no guarantee who services, you have no choice in the matter. Broker shops were forced this year to either go to United Wholesale Mortgage UWM only or Rocket, not both. The mortgage industry is shrinking like steam on high right now with call centers and shops closing. You could double apply somewhere else, in case your broker can't deliver. No lender is points lower on your ins and outs than any other at the same day and time. Get a rate lock in writing and then shop it.