You’ve taken a huge step – you’ve decided to buy a house. Now, you have to decide how to finance it. Let’s face it, there are a lot of options out there when it comes to your mortgage. Enter – Rocket Mortgage.
- Types Of Mortgages
- Will You Qualify?
- The Application And Underwriting Process
- Fees Charged
- Pros And Cons
- Customer Reviews
- Our Take
Rocket Mortgage is an online loan product created by Quicken Loans. It’s mobile-friendly, which means you can be approved for a mortgage right through an app on your smartphone. How 21st century!
But should you use them to begin your home ownership journey? We did the work for you to help you understand what it is, how it works, and if it’s a mortgage product you should consider.
What is Rocket Mortgage?
Quicken Loans launched Rocket Mortgage in 2015 as an online-only home loan mortgage application. It has a separate website and landing page than Quicken Loans but uses the same underwriting standards for your mortgage.
Perhaps the biggest draw of Rocket Mortgage is that it’s a process you complete entirely online. You never have to speak to an actual person, unless you want to of course. It has an online chat feature as well, in case you ever need it.
What Makes It Different?
Rocket Mortgage separates itself from the competition by offering a “YOURgage” feature. This allows you to choose your mortgage term for a fixed-rate loan, from eight years to 30 – whatever works best for you and your home ownership goals. If you’re not sure, then you can adjust the rate, term, or closing costs on the app to see how your payments change with a combination of different factors.
Even better? Because it’s an online lender, services are available in all 50 states.
Types Of Mortgages Offered
There’s not much difference between the products offered by Quicken Loans and those offered by Rocket Mortgage. There are a lot of loan options to choose from, such as:
Also called an ARM, this type of mortgage has an interest rate that fluctuates. Your mortgage rate starts off at an initial fixed-rate term, but then your interest rate will go down or up once per year. At Rocket, you can find five- and seven-year ARMs.
This type of mortgage locks your interest rate in for the life of the loan. That means your monthly principle and interest will remain the same, which is useful for planning and budgeting. Rocket provides 15- and 30- year fixed-rate mortgages. If you take advantage of their “YOURgage” program, then this is the type of loan they offer but with adjustable terms.
Federal Housing Administration (FHA) loans can help those of you out there with limited options for a down payment toward your home. This is also a good option if your credit is not exactly where you’d like it to be. According to their website, Rocket offers FHA loans to those with a credit score as low as 580, but whether you qualify or not depends on your individual situation.
FHA loans are offered in 15-, 20-, 25-, and 30-year fixed rate terms and as five-year ARMs as well. If you qualify for this type of loan, you can get a mortgage for a home with as little as a 3.5 percent down payment.
If it’s a jumbo loan you’re interested in, then you may need to speak with a representative over the phone at Rocket to see if you qualify.
Jumbo loans are loans that exceed the loan limit for mortgages in the area you buy. They require a minimum credit score of 700 and a good debt-to-income ratio. These loans can be given for up to $3,000,000 if you qualify.
Veteran Affairs (VA) loans are specifically for active duty service members and veterans. Rocket offers 15-, 20-, and 30-year fixed-rate mortgages as well as a five year ARM VA option. VA jumbo loans are also out there for the taking if you qualify.
These loans are great because they don’t require a down payment or private monthly mortgage insurance.
Rocket has options to help you refinance, no matter if you’re looking at utilizing a government program such as HARP or a more conventional refinance situation.
One Percent Down
This is an option only for those purchasing a home, not refinancing. Your home must be a single-unit primary residence. If you have an investment property or second home, it won’t qualify for this option.
For this product, you must have a minimum FICO score of 680 and your income must be less than the median income for your county. Your debt-to-income ratio can also not exceed 45 percent. Not every buyer qualifies, so you may need to call the company to access this option.
This loan customization feature is available through Rocket or Quicken. It has you choose a fixed-rate loan term, from eight to 30 years, that best fits our financial needs. It also allows you to pay as little as 3 percent down on your mortgage. Another awesome perk is that you can refinance up to 97 percent of your home’s value.
What You Can Do Online
Rocket Mortgage’s claim to fame is that it allows you to do everything to get a mortgage from start to finish all online. It’s supposed to be a self-service mortgage experience. Of course, there’s always someone you can chat with online or by phone if you need help.
Using Rocket is really pretty easy. First, you fill out an application for initial mortgage approval which takes, as advertised, mere moments. Once approved, you begin the full application process. How long it takes to go from approval to close depends on home-related factors such as your property appraisal and other factors such as your financial situation.
They utilize an online interface called MyQL for you to upload all the necessary financial documents. This portal allows you to access your loan status 24 hours a day, 7 days a week. You can also download the MyQL app for access to all your info on the go.
Will You Qualify?
It’s worth taking at a look at what Rocket Mortgage uses to determine what type of loan product you may qualify for. Knowledge is power, after all! Rocket looks at:
Unless you’re trying to qualify for an FHA loan (which allows for a minimum score of 580), you need to have good credit or better. The lowest interest rates and best terms will be available to people with higher credit scores. That’s why if you’re in the market for a home, then you need to actively work to improve your credit score before applying for a mortgage.
This is your total monthly income compared to your total monthly debt. It basically tells a lender whether or not you can afford the cost of a monthly mortgage payment. Debt that’ll play into this ratio includes any car payments you may have, child support you pay, credit card debt, and student loans.
To figure out what your debt-to-income ratio is, add up your monthly liabilities and divide it by your pre-tax monthly income. The lower the percentage, the better position you’ll be in to qualify for a good rate with a conventional mortgage.
What type of loan you qualify for often depends on how much money you can put toward a down payment. 20 percent of the purchase price is the norm, but if you don’t have that, then it’s not the end of the world.
FHA loans and VA loans often require a very small down payment or no down payment at all. If you don’t qualify for a government-backed mortgage, then private mortgage insurance will be required if you don’t have the 20 percent down payment.
Tip: The Lenders Network give some great advice on preparing for the underwriting process in their article here.
The Application Process
Now that you know what mortgage products are offered and how to qualify, it’s time to talk about the actual process you’ll go through with Rocket Mortgage.
The first thing you need to do is set up an account on their website. After that, you’ll be asked a series of questions about where you want to buy, where you live, who will be on the loan with you, and some financial information. This includes your salary and employment history, as well as your Social Security number, assets, and income. Their site integrates with most bank sites, so you may be able to access your bank information right their system in order to verify your assets.
When you’re done entering all of this information, you’ll see a countdown. After a few moments, Rocket will display what loans you qualify for – from fixed-rate mortgages to adjustable-rate to FHA or VA loans. You can play around with a slider bar on this screen that lets you see what happens to your monthly payment if you change the term of the loan, closing costs, or interest rate.
If one of the options appeals to you, then you can send in your application for approval. Rocket Mortgage advertises that you’ll find out if you’re approved in minutes. That way, you can print out an approval letter to show to a realtor for a home you’d like to purchase.
When you do have a purchase contract to buy a home, then you’ll work with Rocket to finalize your loan amount and features. This will include determining a closing date and moving forward with the more home-centric aspects of buying a home, such as home inspection and appraisal.
The Underwriting Process
Once you reach the underwriting phase, you will have access to a page that has everything you need to complete your loan. This is where you can keep tabs on the progress of your loan, too.
There’s usually a checklist of items you’ll need to complete the process, documents that will require an e-signature, and a place to schedule your closing.
If you need additional documents, this is where you’ll see notifications. You may get requests for more information such as proof of funding or additional assets. The faster you can fulfill these requests, the quicker the entire process will be.
What About Fees?
Rocket Mortgage is just like Quicken Loans when it comes to fees. The normal origination fee is about 0.50 percent of the amount of the loan. VA and FHA loans may have a higher fee but it shouldn’t exceed about 1 percent of the amount of the loan.
Rocket won’t show you ahead of time what the prevailing interest rates are on their website. If you want to find out, you must create an account and provide a little information in order to get a rate personalized to you and your situation.
One of the biggest advantages offered by Rocket Mortgage is that it reduces the hassle of paper associated with more traditional mortgages. That means you can usually close faster on the purchase of your new home.
Another advantage to Rocket is that because it’s an online app, you can set up alerts through push notifications on your phone or text. This helps to keep you up-to-date on how your mortgage process is moving along. It also alerts you when more information is needed to move the process along. You don’t have to wait for a lender to call you back because it’s all right there on at your fingertips!
Finally, a huge advantage over the lifetime of your loan is that Quicken Loans keeps the servicing rights of its mortgages. This means you don’t have to worry about dealing with another company while you have a loan with them. And if you run into financial problems down the line, then you can work out any payment options with a lender with whom you have an established relationship.
It can’t all be puppy dogs and mortgage rainbows – there are just a few disadvantages you need to be aware of if you want to use Rocket Mortgage.
The biggest disadvantage is the most obvious. If you like working with people face-to-face, then Rocket Mortgage may not be for you. Because it’s a lender that exists entirely online, there are no physical locations you can go to. Of course, you can chat with or call a real person at any point in the process, but sitting down and speaking with someone in person won’t happen.
Rocket also doesn’t offer home equity lines of credit. They also mainly offer conforming loans, so not meeting the requirements for a government-backed loan program can put you at a disadvantage. They currently don’t offer USDA loans, either.
What People Are Saying
Rocket Mortgage may sound like a great product, but how do people who have actually used it feel about it? Here are some Rocket Mortgage reviews for you to consider.
Stephen F. has used Rocket Mortgage and says on DoughRoller, “I’ve worked with many mortgage lenders and I’ve never been as impressed with the expertise I’ve received as I have with Rocket Mortgage. I was doubtful at first since they are entirely online, but that feeling went away almost instantly. My mortgage process went smooth from the first contact. I would recommend this lender to anyone looking for a fair and smooth loan process.”
User Christine L. had equally glowing things to say about Rocket through a NerdWallet comment. She said, “I recommend Rocket Mortgage to anyone buying a home, whether you’re a first-time homebuyer or not. Everyone I talked to was professional, knowledgeable, and polite. If I had any questions, they responded right away. Word to the wise, though: You need to be organized and prepared to provide the documents they need in a timely manner if you want to process to go quickly. If you can do that, they take care of the rest.”
The Bottom Line
A mortgage has a huge impact on your financial life since it can be with you for up to 30 years. That’s why it’s so important to find a good lender you can trust. Plus, the world of real estate can be confusing to traverse at times and you need someone on your side who can help.
Rocket Mortgage can be a great lender for many people since the company’s focus is on meeting the needs of each client. If you’re looking for someone to break down your best options and give immediate approval, then Rocket Mortgage can be a great choice for you.[ratings]