Rocket Mortgage Review For September 2022
Rocket Mortgage is one of the biggest mortgage lenders in the country, but it doesn’t have any physical locations.
Alix Langone
Reporter
Alix is a staff writer for CNET Money where she focuses on real estate, housing and the mortgage industry. She previously reported on retirement and investing for Money.com and was a staff writer at Time magazine. She has written for various publications, such as Fortune, InStyle and Travel + Leisure, and she also worked in social media and digital production at NBC Nightly News with Lester Holt and NY1. She graduated from the Craig Newmark Graduate School of Journalism at CUNY and Villanova University. When not checking Twitter, Alix likes to hike, play tennis and watch her neighbors’ dogs. Now based out of Los Angeles, Alix doesn’t miss the New York City subway one bit.
Rocket Mortgage is the largest online retail mortgage lender in the US. This online lender offers a wealth of educational content on its website to help buyers better understand the mortgage and home-buying processes.
Its website has multiple, easy-to-use mortgage calculators to help you determine how much house you can afford. Rocket Mortgage is one of the top lenders of FHA loans, which are lower, flexible down payment options for first-time home buyers. It is also one of the largest securitizers of VA loans, which are lower-cost mortgages for veterans and their family members.
How Does An Appraisal Differ From A Home Inspection
Though an appraiser isnt looking for things like paint on the walls or childrens toys in the yard, small things can still affect the appraisers overall assessment. Its important to note that while appraisers evaluate some of the obvious issues that may affect the value of a home, appraisals are different from a home inspection.
A home inspection is a much more detailed walkthrough of a home and examines wear and tear, risks, damage and hazards. You still need to do an inspection even if you have an appraisal done on a home you plan to purchase.
Declining Market In The Neighborhood
The appraiser is required to assess the real estate market in the neighborhood by selecting one of three choices: increasing, stable or declining.
If the property is in a neighborhood that has experienced declining values over the previous 12 months, then the lender can ask for more money down, regardless of what the final value may be.
If the borrower doesnt have the extra money for a larger down payment, then their mortgage could be declined.
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What Is An Appraisal Contingency
The contingency clause in your purchase agreement means that you can walk away from a low appraisal on a home without losing money. Its important that you can walk away from the get-go, so make sure your purchase agreement contains an appraisal contingency to be absolutely safe. If the home doesnt appraise for the amount youve agreed to pay, sometimes walking away is the smartest and safest thing you can do.
What If Your Purchase Appraisal Is Higher Or Lower Than You Expected
If Youre The Buyer
Pat yourself on the back if youre the buyer and your appraisal comes back higher than you expected. You just got a great deal on a home. You can proceed to the closing as planned.
But what happens if youre the buyer and your appraisal comes in lower than you expected? You could face some complications with your mortgage lender. Lenders wont loan out more money than a property is worth.
For example, if you offer $150,000 for a home, but an appraisal determines that the home is only worth $130,000, your lender wont give you the full $150,000 you need. Its up to you to cover the discrepancy.
You have a few options if you get a low appraisal as a buyer:
Make up the difference in cash. A low appraisal doesnt mean that the lender wont give you a loan. It just means that you cant borrow more than the appraisal indicates the home is worth. You can pay the difference between the appraisal and the sale price at closing if you really want the property. In general, this is not recommended, and caution is always advised if youre considering paying more for a home than its appraised value.
Request a new appraisal. Appraisers arent perfect. You have the option to contest the appraisal and request a new one. Review the appraisal report and look for errors that could justify an appeal. Failing to notice upgrades and comparing the property to properties very far away from the home are a couple of common reasons for appraisal appeals.
If Youre The Seller
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The Bottom Line: Fha Appraisal Requirements Must Be Met Before Closing On Your House
An FHA appraisal is very similar to a regular appraisal, just with a few added requirements. When you get an FHA loan, its important to be aware that this appraisal will determine whether you can get a loan for the house. Be sure to keep that in mind when looking for houses unless youre willing to take on additional debt for repairs, fixer-uppers wont be an option.
Going through the home buying process right now? Check out our guide on what to do after your offer is accepted to help ensure you have a smooth and efficient closing, no matter what type of loan youre taking out.
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Structural And Other Construction Materials
Construction has changed over the years and builders have found new methods, technology and even materials that can make the home stronger, more energy-efficient, safer and, thus, more valuable.
Some homes, particularly older homes, were built with dated materials that are now seen as hazardous. This includes things like asbestos tile and insulation and lead paint. Even if the materials are safe, if they havent been updated, your home may not be as energy-efficient, which could also affect value. This is especially true for old windows and doors. Roof and siding that is outdated, worn out or damaged can be pricey to fix, so that could also be a major issue that can drive down value.
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Why Do I Need An Appraisal To Refinance
When youre refinancing an existing mortgage loan, an appraisal measures the value of the home, which in turn allows them to calculate the value of your equity or the part of your home youve already paid off.
The appraisal helps the mortgage lender to ensure that its not lending more than the home is worth. It can also help to determine the mortgage rate and loan options available to you.
Finally, an appraisal is always required for a cash-out refinance, since the lender is trying to verify how much equity the homeowner has available to borrow.
Though conventional wisdom says you need 20 home equity to refinance, there are loan programs that will allow you to refinance even when you have less equity. For example, both Fannie Mae and Freddie Mac offer programs that allow refinancing with as little as 3 percent home equity .
There are a few loan types that can allow a homeowner to refinance without an appraisal, including the Streamline Refinances available to homeowners with VA, FHA or USDA loans. However, theyre only available for eligible borrowers who are looking for the same loan type they already have: an FHA borrower can use only the FHA Streamline Refinance a VA homeowner can use the VAs Streamline Refi and so on.
A home appraisal to eliminate PMI
Even if youre not refinancing, a home appraisal could lower your monthly payments on a conventional loan. The savings can come from eliminating private mortgage insurance, or PMI.
Unique Or Rural Homes
If you have a unique or rural home, theres not much you can do to change that. The reason having a unique or rural home can be a problem is that it can be difficult to assign a value to unique houses or rural properties because of a lack of comparables. There are far fewer homes in rural areas, so it may be hard to find multiple homes that have sold in the area. And unique homes are called that for a reason no other home is like it. So how do you find similar homes to compare it to?
When appraisers come across this issue, they may have other options, like looking for comps in competitive neighborhoods, finding a fit between the top and bottom price inside the market or giving a range in value instead of an exact number. Of course, these estimates are less precise, which means the home could end up being undervalued.
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What Can You Expect From An In
Depending on your reason for refinancing and the amount of equity youve built in your home, your lender might order a full appraisal. A full appraisal will require a home visit. When it comes to a refinance appraisal, you have the option to attend the appraisal if you want.
The appraiser will conduct a thorough inspection of the homes exterior and interior to judge the condition of the property and make note of its size and features. The appraiser will then run an analysis that determines the fair market value of the home by comparing it to similar homes that have sold in the area recently.
What Are The Fhas Appraisal Guidelines
When you get an FHA appraisal, your appraiser will be looking to make sure your property is up to the following standards:
- The property must be free of any physical hazards, odors or defects .
- Rooms must have adequate light and ventilation.
- The property must have proper irrigation and drainage.
- The surrounding site of the property must also be free of hazards.
- The home must be safe to access.
- All utilities must be connected and in working order.
If your property meets the above standards plus any other health and safety-related tests, the appraiser will then compare the home to similar ones in your area to determine the houses market value.
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What If Im Not Happy With My Homes Appraised Value
This policy may vary between lenders, but if youre not happy with your homes appraised value, you may have the option to request a second opinion from a separate appraiser. This may or may not result in a higher market value being assigned. The risk you may face is having to pay the cost of both appraisals if the second valuation is no higher than the first.
If youre buying a home and the appraised value comes in low, you may want to reconsider whether you should proceed with the purchase, even if theres still enough equity to qualify for the mortgage. It could be a warning sign that the price youre paying is too high.
How Much Does A Home Appraisal Cost
A home appraisal can cost anywhere between $600 $2,000. You’ll pay less for a single-family appraisal than a multifamily one.
Even though most lenders require an appraisal as a condition of a loan closing, the buyer pays for the appraisal unless they negotiate for the seller to pay instead. The amount that a buyer pays for an appraisal depends on a number of factors, including the size of the home, the homes location and the amount of property research that the appraiser ends up doing before they issue a final value report.
Keep in mind that if the property is on a very large plot of land, the appraisal cost will be more because the appraiser often surveys the boundary lines of the property to make sure that the listed square acreage is correct.
Buyers can also expect to pay a higher appraisal fee in a very rural area simply because there are fewer appraisers working in these areas. This might mean a longer wait for an appraisal as well. If you have any questions about how much your appraisal will cost, consult with your mortgage lender.
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Pros And Cons Of Rocket Mortgage
Pros
- Instant verification. Find out how much you might qualify for in minutes. Get a quote minutes after you apply online.
- Fully online process. Unlike other loans, Rocket Mortgages convenient application, verification, documentation and funding take place online.
- Large amount of partners. Rocket Mortgage as Edison Financial is partnered with over 50 lenders.
- Possible open mortgage. If you opt for an open mortgage, you can pay off your mortgage early without any penalties.
Cons
- Hard credit inquiry. Once you decide on a lender, applying for a mortgage loan includes a hard credit inquiry, which can lower your credit score.
- Limited availability in Canada. Edison Financial is only licensed to offer loans in Alberta, British Columbia, and Ontario.
Edison Financial Reviews And Complaints
Before rebranding to Rocket Mortgage Canada, Edison Financial had a 4.8 out of 5 star rating from Google based on 420 reviews, as well as a Trustindex of 4.8 out of 5 stars based on 303 reviews . Most customers speak highly of the responsive customer service of its mortgage specialists. The poor reviews mostly center around some potential customers being frustrated with the response time or a lack of options compared to other brokers.
Rocket Mortgage has been accredited with the Better Business Bureau since 1986 and has an A+ rating as of July 2022. Of the 1,748 BBB customer reviews, Rocket Mortgage has earned a 2.57 out of 5 stars. While most reviewers have good things to say, some borrowers warn of poor account communication among loan officers and report submitting the same documentation multiple times as a result. Rocket has closed 495 customer complaints over the last year.
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What Are The Benefits
An appraisal waiver does come with some benefits for buyers.
An appraisal waiver will save buyers money. The costs of these in-person visits vary, but they typically run from $300 $450.
An appraisal waiver can also reduce the amount of time it takes to close on a home. With an appraisal waiver, your closing wont be held up while you wait for an appraiser to schedule a visit to the home you are buying.
And sellers who are concerned about having another person in their home during COVID-19 can avoid this if buyers successfully apply for an appraisal waiver.
What Do Appraisers Look For In A Refinance
The goal of an appraisal is to estimate the fair market value of the home. The appraiser does this by looking at the condition and characteristics of the home and comparing those to other homes in the area.
First, the appraiser will look at your homes basic specifications, including the square footage, number of bedrooms and number of bathrooms. Theyll also look to see if theres any damage to the home or anything that threatens the safety of the home. Finally, the appraiser will look to see what upgrades and improvements youve made to the property, which can increase the value of the home from its previous appraisal.
Once the appraiser has gathered relevant information about your home, it will look at comparable homes that have recently sold, as well as their sale price. Looking at the market value of similar homes is what ultimately helps determine the value of yours.
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What If The Property Doesnt Meet Fha Appraisal Requirements
If the appraisal comes back and the home failed the health and safety requirements, you cannot get an FHA loan for the property. In order to qualify for the loan, the home must meet HUDs guidelines. If you want to save the purchase, though, you can try to negotiate and request that your seller pay for repairs or offer to pay for repairs yourself. Only once the home meets HUDs guidelines can it be purchased and inhabited by the home buyer. That means some work may need to be done to make that happen.
Of course, making repairs means that closing will be delayed. If you need to move in the near future, waiting around for repairs may not be the best option for you and you may want to consider backing out and looking for a different home.
Outdated Systems Appliances And Interiors
Updating appliances or any major systems, like plumbing, electrical or HVAC, can be costly, so if yours are outdated, it could affect the overall value of the home. And if the interior hasnt been changed for decades, it may not appeal to buyers, which can also cause the value to decrease.
Outdated features like these could also signal that the home has not been taken care of properly and more issues lie beneath.
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What Do Home Appraisers Look For In My Refinance Appraisal
Similar to a purchase appraisal, the appraiser will inspect the interior and exterior to determine the size, features and condition of your home. Theyll also look for any permanent improvements youve made to your property, including upgrades added outside of your homes living space, such as a pool or garage. Finally, the appraiser will analyze the fair market value of your home against other comparable homes or comps that have recently sold in your area.
Minimum Down Payment Requirements For Rocket Mortgage
The down payment requirements with Rocket Mortgage are the same standard requirements for all home loans. Here are the requirements by loan type:
- VA loan: 0% minimum down payment required
- FHA loan: 3.5% minimum down payment required
- Conventional loan:3% minimum down payment required
- Jumbo loan: 10% minimum down payment required
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