I used Better.com for my most recent (and first!) investment property. I was not compensated by Better.com for this review.
Beyond your real estate agent, one of your closest colleagues between offer and close on your property is your lender (for better or worse!). There are a ton of options out there for lenders. In this post I will briefly walk through how I found my lender and report on my experience with Better.com.
Finding a Lender
As I mentioned in my mortgage pre-approvals post, I used Better.com for pre-approval as well. You can read the details here, but in short, the process was very easy. Better.com was already on my radar because they had the best rate on Bankrate.com while I was looking for pre-approval.
Mortgage Brokers
Unfortunately, when I got my pre-approval I didn’t get the same approved rate that I had initially found on Bankrate. In fact, it was pretty far off! I have good credit, so I expected to be at or near the rates posted. I was actually about 0.75% off. That’s a lot!
A friend of mine directed me to his contact, a mortgage broker. Mortgage brokers handle the lender search process for you, and act as the quarterback to move the process along. There are some advantages and disadvantages to brokers, and Investopedia has a nice simple breakdown. The main disadvantage is they don’t work with all lenders. There could be a lender out there with a better rate!
I found my mortgage broker to be very honest with me. Especially when you are a rookie, it is a good opportunity to ask stupid questions without scaring off your lender. For example, can I move my property to an LLC after close? What are the differences between lenders? Can you outline why investment properties have higher rates than second homes?
Back to Bankrate.com
In addition to the quoted rate I got from my mortgage broker, I also went right back to Bankrate. Turns out Better.com was still advertising the great rate I had seen before, and a lot of other lenders weren’t too far off. However, my mortgage broker was about in line with the other quotes so I began the process of approval with him.
Confirming with Better.com
I wanted to double check with Better.com since I was seeing a discrepancy between advertised rates and what they were quoting me. I sent a short email and received a quick note back that they were checking into it. The next day, they apologized for the discrepancy and offered me the advertised rate. Boom! I had my lender.
Starting the Process
I ended things with my mortgage broker. He was honest and said he could not match the rate that I was given. He also gave me a warning. Apparently Better.com had sent him several customers because they just couldn’t get the process moving. As in they left Better upset, not that Better actually sent him clients. Appraisers were stretched thin at the time. In my area, Better.com just couldn’t get people out to the houses in a reasonable amount of time. Or at least that is what my broker claimed.
I had a relatively long close with about a month and a half from contract to close. I figured I would be ok getting an appraiser out and would keep an eye on it. The long close did, however, have another consequence. It cost me a bit of money to lock in the low rate for longer than 30 days. They considered it something like buying a point as their 60 day rate was higher than 30 days, so I had to pay a small amount at close.
I agreed to the rate and started collecting documents.
Working With Better.com
Better.com has a pretty slick interface for collecting information. They ask you a series of questions, often requiring supporting documents. You can answer questions, sign documents digitally, and upload documents all in one place online.
The process is iterative. As you answer the questions and send financial records, they review them and ask more questions. I went back and forth for a couple of weeks until things were relatively quiet for a time.
There were some cases where they asked for things that didn’t apply or I had a question on. It was easy to ask questions and get responses right on the same platform, and they were pretty easy to get a hold of by phone or email if something needed to be talked out.
Overall I thought it was great. I always had a simple to use and reference check list of what I needed to do to move things along. Answering all of the questions can be a marathon, but I didn’t feel like they ever asked me anything unreasonable. Of course, the whole process can seem unreasonable… I just mean I don’t think they were any tougher on me than another lender would be.
Hiccup at the Close
I don’t know why the title company and Better.com waited until the last second to reconcile everything, but they did. All was quiet until just a week or so before close when Better asked me a few more questions. Nothing out of the ordinary.
On the day before close, I still did not have a final amount to wire. I was heading up the next day to clean up and get the property ready to rent. I did everything I could to make things smooth so I would have plenty of time to work on the house. My agent called the title company, I called Better.com and they both said they were working on it. Title said they would stay after 5pm if needed, Better.com said they would send things before close of business. None of that happened.
Business closed and I called Better.com again (who was still at work in another time zone). They were still working to reconcile things with the title company and I didn’t get any more information than that. However, they assured me they would have someone ready to shepherd the process through at 8am the day of close. To their credit, they did.
My close was at 10am and my agent had the final document to review at 9am. Unfortunately he was on the road to meet me for the final walkthrough. That walkthrough is a story all on its own to be covered in a future post. We reviewed the final document while waiting at the title company, and I literally put in the wire at the closing table.
Final Thoughts on Better.com
According to my mortgage broker, some folks had issues with Better.com getting an appraisal and pushing things through in time. I did not have the same issue. I found their process to be very streamlined and reasonable. Finally, the rate they offered me was second to none.
There were some issues right at close, but it’s hard to attribute that to the lender or title company. In the end, things did work out just fine.
I plan to have this loan for a long time, and a small difference in rates can really add up over the long term. Their rate was worth the pain at close (which again may or may not have been their fault), and the process was really pretty streamlined. I would definitely use them again.
Keep in mind:
- Don’t be afraid to ask for a lower rate if you see one advertised elsewhere
- Answer questions quickly to keep the process moving forward
- Call them if you’re confused, their staff was kind, helpful, and responsive
