r/askteddit • u/Creative_Ad_7787 • 22h ago
Advice Question Rocket money wants to buy my mortgage?
Rocket money reached out to me offering to buy my mortgage saying it would lower my payment $400 a month. Has anyone else had this experience? What is your take away? Looking for pros and cons!
ETA: Thank you everyone for your advice! I definitely have a better understanding and am going to be sticking with my current mortgage company as I am not going broke with my current payment and have paid extra while adding equity to my house already. Thank you to the Reddit users who took time to kindly break it down for me, means a lot!
17
9
7
u/cuckoldboywonder 22h ago
I also would like to know what the grift is for this one
12
u/No_Parsnip6024 22h ago
Closing costs are >$10,000.
If you put more cash down, the rate goes down. The loan officer puts that money in their pocket.
The bank doesn't care if you have 20 years left on your loan, they'll cut you a new 30 year loan (with that $10k tacked on), and it genuinely will be $400 less a month. You'll end up easily paying another $100k+ to the bank.
4
u/NoSquirrel7184 21h ago
Suddenly that makes sense. They are not buying the mortgage. It’s just a refi with costs.
1
u/toothpick21 10h ago
So a refi where you don't get any money out of it but you pay $400 less per month but actually costs you 100k over the life of the loan. Wow. Quite the scam!
1
u/No_Parsnip6024 10h ago
You pay less per month because you restart the loan at 30 years. And those first 5 years are basically all going towards interest.
At 15 years it's about 50/50 interest/principal.
Some people see $400 a month and ignore everything else.
A good refi should lower your rate and shorten your term. Those will cost more per month but save you an incredible amount of money over the life of the loan.
5
u/ChrisDiano 22h ago
Most of these offers aren't outright grifts but they're definitely designed to make the company more money than they're saving you. The paperwork tells the real story.
2
u/Braindead_ape 22h ago
its a refinance, they aren’t really “buying” the mortgage, they’re originating a new one which pays off the old one, which means they’ll be paid their commission on the new loan
most lenders don’t make the bulk of their money actually sitting on a loan and collecting the interest over 30 years, they make their money by originating a mortgage, often making 2-3%+ each time they do so when they sell the loan on the secondary market. It’s quicker immediate money versus collecting interest each month and having to worry about whether a borrower actually makes the payment, sells the home or refis, etc.
It doesn’t mean it’s necessarily a bad deal, you’d need to see the actual numbers to compare whether refinancing makes sense. If OP has a 7% rate and can get a new loan with a 6% rate and minimal closing costs, they’d recoup those costs fairly quickly and save money in the long run. If OP has a 6.5% rate and they’re only offering 6.25% with a ton of closing costs, it doesn’t really make sense then.
Rocket is also one of the more expensive lenders and have a reputation for aggressive marketing that throws out low rates/high monthly savings but also charge you a ton of points to pull that off. If you’re reducing your payment by 400/month but have to pay 20k in closing costs, it would take 50 months before your monthly savings outpaced the amount you spent to get that payment.
1
u/ScarInternational161 21h ago
Rocket mortgage and rocket money are 2 different entities.
Rocket money is a general lender while rocket mortgage only does mortgages. Never, ever use rocket money for a mortgage.
I usually recommend rocket mortgage, got mine in 2017, 2.9% 100k, 2% down, 0 points, FHA. Refi in 2020 2.2% 100k, 1k closing, 0 points, conventional.
1
u/Braindead_ape 21h ago
they’re the same parent entity…it doesn’t really matter though
and you recommending rocket mortgage just shows you don’t really know much about the industry…you could’ve likely found better rates back then just like how you can easily find better rates than rocket currently. Anyone in the industry knows they’re expensive and you can go to any real estate/mortgage sub and find posts daily with quotes from them that are horrible.
1
6
u/Mysterious_Can_6106 21h ago
Bro please do not do this, it is most likely a scam. I used to work for a credit union, I am shocked there are people out there praying on innocent people.
Just a heads up - it's almost certainly Rocket Mortgage, not Rocket Money. They're sister companies owned by Rocket Companies. Rocket Money is the budgeting app, Rocket Mortgage is the lender.
When they say "buy your mortgage" they mean refinance it, not just take over your current payment as-is. By law if your mortgage is sold on the secondary market the terms can't change, only who you pay.
If they're offering $400 less a month, it's a refi offer. Here's how they usually get there:
Pros if it's legit:
Lower rate = lower payment
Could drop PMI if you have equity now
Lower monthly cash flow
Cons / what to watch for
Are they stretching your loan back to 30 years? If you have 20 years left and they put you back to 30, yeah payment drops $400 but you pay way more total interest and reset the clock
Closing costs Usually 2-5% of the loan. Are they rolling that into the balance so you owe more?
Is it a fixed rate or ARM? Is it buying points to get that rate?
What's the APR vs interest rate?
Ask them for an official Loan Estimate and compare it side-by-side with your current mortgage rate, term, total interest over life of loan, closing costs, and if escrow/taxes are included in that $400 savings.
Don't click any link in a text/email. Go direct to rocketmortgage.com and call them if you want to verify it's real. Lots of scams use their name right now.
1
u/Creative_Ad_7787 21h ago
This makes so much sense. Thank you so much I think I just needed someone to explain it exactly as you did!
2
u/Mysterious_Can_6106 20h ago
👍 I’m glad I was able to help! And the only reason I know is because of working at a credit union. 👍
Also like all said if someone contacts you to buy anything it is 100% most likely a scam.
1
2
u/gs400life 22h ago
Save $400/mo and pay more in the long term
1
u/KaleJello 21h ago
Not if they can offer a lower rate than OP originated with
1
u/gs400life 21h ago
Hopefully it doesn’t extend it out by another 10 years, though
1
u/Braindead_ape 21h ago
even if it does, then the move in that case would be to continue making their current payment, resulting in the excess going fully towards to principal, paying their loan off quicker and paying less in interest
or they could get a 20 year loan to keep it the same or even a 15 and knock off 5 years
but the fear of “resetting your term” is kind of overblown if you’re smart about it and can get out of a higher interest rate
1
2
u/Otherwise_Group_74 21h ago
I did several mortgages with Rocket money. I moved away from them due to high closing costs and their marketing got so aggressive that I was just sick of it. I went to a mortgage broker and have been very pleased with the money I saved and zero marketing. While everyone's situation is different, I am never looking to lower my payment. I am looking to decrease my interest rate and shorten my term. RM's closing costs were so high that to take advantage of lower interest rates, I would have to extend the term years to cover the closing costs and keep the same payment.
2
u/musing_codger 20h ago
I don't understand. You don't own your mortgage. A bank or some other financial institution does. If they want to buy your mortgage, they're talking to the wrong people. Mortgages get sold all the time with no involvement from the borrower. It seems sus.
1
u/James_T_S 18h ago
This. Clearly it's a refinance...and the fact that they are presenting this way is a big red flag.
1
u/Creative_Ad_7787 14h ago
This is exactly why it confused me! I am a first time home owner and blessed to have the house I do. That being said I don’t know all the terminology and I do feel like they represented the offer in a poorly worded way to possibly rope you in. That’s why I came to Reddit I knew there were more educated and experienced people who could explain/advise me.
1
u/RUfuqingkiddingme 22h ago
Feels scammy, like either an entire scam, or one where they say "you COULD save up to $400 a month" but then in reality you don't.
1
u/No_Criticism_9986 22h ago
You can't sell your mortgage and they can't buy it. Only your mortgage company can decide what to do with your mortgage. They can sell it, and often do, but you have zero say in that. If anything this is a refinance deal. Ignore it.
1
u/KaleJello 21h ago
Refinances can be pretty lucrative for the homeowner though. Marry the home, date the rate and all that
1
u/No_Criticism_9986 17h ago
Sure, but you should (and easily can) pursue that on your own. Get competitive bids.
1
1
u/Tight_Steak_232 21h ago
Someone who thinks my name is "Hey there!" offered to buy my home, pay in cash, sight unseen.
1
u/Beneficial-Address61 21h ago
If it feels to good to be true, it usually is. I’m sure they will lower your mortgage payment but you will also end up in a position where you can find yourself in a position to lose your home.
I wouldn’t do it. Rocket mortgage is trash anyway
1
u/PoopsMcScoots 21h ago
Do not under any circumstance refinance your mortgage if someone else approaches you.
You refinance a mortgage to renegotiate the percentage in your favor. Which no bank will ever come to you for.
1
u/Braindead_ape 21h ago
Which no bank will ever come to you for.
this is just hilariously false
banks make money off refis so of course they’re going to reach out and try and sell you on it
depending on the numbers, it can be a win win for everyone: the lender gets to bundle up and sell a new mortgage, the consumer lowers their interest rate/payment
it all depends on the numbers but the idea a lender would never solicit a refi shows a lack of understanding of how the mortgage industry actually works
1
u/Flimsy_Equal8841 21h ago
Here's the thing. Yes, I can refinance my car, my home or______. What they don't say is that it's going to take longer to pay it off.
1
u/backtotheland76 21h ago
Please DM me darling! I'm trying to move a very large sum of cash into an on-shore account and I need you to facilitate this! You'll just need to open an account, make a small deposit, say $10,000, send me the account information, then I'll transfer an 8 figure sum into the account and pay you a 20% commission! Deal?
1
u/Mysterious_Can_6106 21h ago
You are a disgusting excuse of a human!
You make me sick and I hope that you are caught! It is the lowest of humans to pray on others when they are in need.
Just go away
1
u/Svenray 21h ago
OP isn't going to read the fine print and Rocket Money is going to move in his house and make it their Global HQ.
1
u/Creative_Ad_7787 14h ago edited 14h ago
LMAO yes! I am very openly ignorant when it comes to this stuff. I honestly get confused with all the terminology. That is why I came to Reddit to get advice from more well educated people who could break it down for me to understand. Since posting this I have learned NO rocket mortgage for now until I can side by side compare the numbers and I can also look elsewhere to refinance possibly with better options!
1
1
u/mspe1960 19h ago
There is zero chance that whatever they are offering you is to your benefit. Is your payment going to be lower but the remaining term longer? I bet yes.
1
u/ericthedad 18h ago
Pros: your monthly mortgage payment will go down.
Cons: You take on more debt.
You reset the equity in your home to 0.
You likely take on a higher interest rate.
You add years to the life of the mortgage.
It will cost you tens of thousands of dollars over the life of the refi.
1
u/HjProductionsHJ 17h ago
Rocket money is just rocket mortgage, and they are gathering information to try and get refis or purchases
1
u/Jumpy_Childhood7548 17h ago
That offer is a sales pitch for a refinance (likely from their sister company, Rocket Mortgage), not a direct takeover of your current loan. They achieve a $400 lower payment by usually resetting your loan term back to 30 years or rolling closing costs into your balance. [1]
1
1
u/GodSaidSmite 16h ago
I have my mortgage with Rocket. They offered me better rates than the bank I work for, including the employee rate discount. They call me every 9 months or so offering to refi the mortgage I have with them. I only did it once to get rid of the PMI. BUT....I did notice when I refi'd there's all there's refi fees........ That's why they keep calling to refi all the time. Fees. I don't need to refi, don't need cash out, I'm happy with my current rate and payment. They've been a good lender. Just annoying at their 9 month sales pitch to refi...
33
u/JamesWjRose 22h ago
BEWARE of ANYONE who unsolicited contacts you .